The next-generation GST reforms, aimed at boosting consumption, have received praise from all corners. Ever since the GST Council announced the slashing of GST rates on several items, including nil on health insurance, people are questioning who gets the maximum GST health insurance benefits.
Note that from September 22, 2025, no GST will be applicable on individual health policies, family floater plans and senior citizen plans. Currently, they attract a GST of 18% on the base premium.
Overview of the GST reforms
At the recently concluded 56th meeting of the GST Council, it was decided to reduce the number of GST tax slabs from four to two. The two new slabs will be 5% (merit rate) and 18% (standard rate).
There is a 40% special rate luxury goods. Tax rates on several daily items and consumption have been reduced. However, the one that has got special attention from all is zero GST on health insurance policies. Let’s see the categories that will derive the GST health insurance benefits the most.
Individual policyholders: The primary beneficiaries
Nil GST on health insurance will hugely benefit policyholders who buy individual health insurance policy. It will significantly reduce the premiums they need to pay for their policy. This will make health insurance more affordable and encourage more people to buy policies for themselves.
With lower costs, individual policyholders may also consider opting for higher coverage to enhance their protection quotient. Individuals can also consider adding the necessary riders to their base policy for better protection against rising medical inflation.
Family floater policies: More affordable coverage
Family floater policies are a cost-effective way to cover all family members under a single health insurance policy. In such policies, the coverage is shared among all members. Note that premiums in a family floater plan depend on the age of the eldest member.
This often resulted in higher premiums, making people hesitant to opt for such policies. However, nil GST on family health insurance plans can make these policies more affordable to a large section of the country’s population.
Senior Citizens: Why it matters more to them
Unfortunately, the majority of seniors lack health insurance coverage. They are highly vulnerable to falling sick due to age issues. Living without health insurance can be detrimental for seniors, as even a few days of hospitalisation can result in significant out-of-pocket expenses.
This, in turn, can reduce their retirement corpus manifold and with a break in active income, the results could be disastrous. That’s not all. Many seniors struggle to afford the high premiums for health insurance policies. Note that insurance premiums depend on age and health conditions, both of which are often not in the favour of the elderly.
However, GST rates being reduced to zero will greatly benefit senior citizens by making health insurance affordable for them. Not only can they buy new policies, but can also renew their existing policies without worrying about high costs.
Small business owners and self-employed
Small business owners and self-employed individuals will also benefit greatly from this move. They are often hesitant to buy health insurance due to irregular cash flows.
However, now with premiums all set to come down, this section of the population can provide themselves with better protection at a reasonable price. A reduction in premiums means that more small enterprises and gig workers can continue with their insurance policies in the long run.
Maximising your benefits
The move to remove GST on health insurance could be a game-changer for the sector. Although awareness of health insurance has increased in recent years, there's still a long way to go. For you to maximise benefits from the recent decision, plan purchase or renewal of your health insurance policy on or after September 22, 2025. If you do so, you can get the benefit of reduced premiums.
That said, if your policy is up for renewal and is in a grace period, it’s better to renew it right away without waiting. You can avail the benefits of reduced premiums on your next renewal. After all, it’s better to remain covered than to be unprotected. For any queries, reach out to our executives on our toll-free number at 1800 2666.
Disclaimer: The information provided in this blog is for educational and informational purposes only. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.