Government is working on a cashless health insurance scheme for senior citizens which may be announced in the upcoming Union Budget 2016-17.

Around Rs 10,000 crore – lying unclaimed in banks and insurance companies, EPFO and small savings schemes — would be utilised for providing the health insurance cover to the elderly, sources said.

Senior citizens are often dependent on their children or extended families for healthcare, they said, adding that the proposed scheme will help in meeting secondary and tertiary health care needs.

The quantum of insurance cover would be more than Rs 50,000 for person over 60 years.

Finance Minister Arun Jaitley will present the central budget for the next financial year on February 29.

The proposed scheme will be administered by the Department of Financial Services under the Finance Ministry.

The government proposes to link this scheme to bank accounts of beneficiaries to directly transfer the subsidised amount to the accounts. As per the proposal, the government would subsidise the premium for those below poverty line by up to 90 per cent through cash transfers to their bank accounts.

It’s not that the government will forfeit these unclaimed funds, sources said, adding that if claimants come forward they will be paid because the fund would be revolving in nature, sources said.

Health insurance scheme for senior citizen would be a logical extension of the ongoing low premium life insurance (Pradhan Mantri Jeevan Jyoti Bima Yojana), general insurance (Pradhan Mantri Suraksha Bima Yojana) and pension plan (Atal Pension Yojana) of the government, sources said.

The Pradhan Mantri Jeevan Jyoti Bima Yojana offers a renewable one-year life cover of Rs 2 lakh to all savings bank account holders in the age group of 18-50 years, covering death due to any reason, for a premium of Rs 330 per annum.

The Pradhan Mantri Suraksha Bima Yojana offers a renewable one-year accidental death-cum-disability cover of Rs 2 lakh for partial/permanent disability to all savings bank account holders in the age group of 18-70 years for a premium of Rs 12 per annum per subscriber.

The Atal Pension Yojana focuses on the unorganised sector and provide subscribers a fixed minimum pension of Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 or Rs 5,000 per month, starting at the age of 60 years, depending on the contribution option exercised on entering at an age between 18 and 40 years.

PTI

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Sources: Financialexpress.com

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Budget 2016 – High Chances of Boost in Take Home Salary – An analyst said this could also help arrest the trend of higher job creation in the informal sector and jobs of informal nature in the formal sector.

The Union Budget 2016-17 is likely to announce measures to put more money into the hands of employees with a monthly income up to a certain threshold, like Rs.10,000, for instance, by doing away with their mandatory 12 per cent contribution for Provident Fund (PF) savings, a government official said on condition of anonymity.

“We are in favour of waiving the employees’ contribution altogether up to a certain level of income. This will boost the take-home salary of such employees rather than force them to park so much of their monthly income into their EPF account for retirement,” said the official, who had participated in the deliberations of a Committee of Secretaries, set up by Prime Minister Narendra Modi, that has endorsed the idea.

Presently, 24 per cent of salaries of all employees in the formal sector earning up to Rs.15,000 a month, are deducted towards the employees’ PF account — with 12 per cent counted as employer’s share and 12 per cent as employee’s contribution.

Employers would continue to pay their 12 per cent share towards employees’ retirement savings account and other administrative charges, including those related to the employees’ deposit-linked insurance scheme that EPF account holders are automatically enrolled into. EPF contributions are mandatory for all firms employing twenty persons or more.

If the employees’ contribution is waived for those earning up to Rs.15,000 a month or Rs.1.8 lakh a year, the current ceiling for statutory EPF contributions, it would increase take home salaries for such employees by Rs.1,800 a month or Rs.21,600 a year. Officials said this would be the equivalent of a tax break to such beneficiaries as they are anyway not liable to pay any income tax. Personal income upto Rs.2.5 lakh a year is exempt from income tax.

While the government hopes this could spur domestic consumption and demand and play a part in reviving the investment cycle, it is also keen on doing away with the system of imposing high forced savings on low income workers through the statutory EPF contributions. The labour ministry as well as the Employees’ Provident Fund Organisation that administers the scheme have been consulted over the proposal and have concurred with it.

An analyst said this could also help arrest the trend of higher job creation in the informal sector and jobs of informal nature in the formal sector.

“In a formal sector job, if you earn Rs.15,000 a month, 44.3 per cent of your salary is deducted towards statutory benefits like EPF and employees’ State insurance. For someone earning Rs.55,000 a month, the same number is just 8 per cent,” said Rituparna Chakraborty, Senior Vice-President at Teamlease.

A lot of young entrants into the workforce prefer to opt for informal work contracts with no benefits in order to ensure that their take-home salaries remain high.

“Employers can’t raise their cost to company for employees, while the young workers starting their careers want more money in hand to take care of rent, commuting costs and daily meals. And once they start their career informally, it is difficult to change track,” said Ms. Chakraborty, adding that the reduction in statutory contributions for EPF would incentivise the creation of more formal jobs.

Source: The Hindu

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