On November 11, the CBRC solicited comments in the industry on the "Notice on Matters related to expanding the scope of products applicable to commercial health insurance Individual Income tax preferential Policies (draft for Comment)" (hereinafter referred to as the "draft for comment") to further expand the scope of commercial health insurance products applicable to individual income tax preferential policies. At the same time, the control over the form, pricing and management of related products is relaxed.

The draft for comments makes it clear that the scope of tax-preferred health insurance products is to be extended to the main types of health insurance, including medical insurance and long-term care insurance. At the same time, there will be no standardized provisions for tax-advantaged health insurance products, and in addition to the requirements for people with pre-existing conditions, product design will be handed over to market entities, and retrospective analysis will be strengthened to ensure reasonable pricing.

Industry analysts pointed out that the relaxation of the control on the design and pricing of tax premium health insurance products is conducive to promoting the healthy development of products and improving the problem of "crying good" before. At the same time, it is also conducive to improving the enthusiasm of commercial insurance institutions for product innovation, promoting healthy competition in the commercial insurance market, and promoting the development of tax-advantagedhealth insurance.

In order to promote the preferential personal income tax policy of commercial health insurance to benefit more people, further give full play to the positive role of commercial health insurance, effectively reduce out-of-pocket medical expenses, and enrich the insurance protection for people with pre-existing conditions and elderly people, It is planned to expand the scope of tax premium health insurance products, expand the scope of the insured, expand the scope of insurance company selection, and expand the insurance conditions for people with pre-existing conditions.

Among them, in terms of expanding the scope of products, expanding the scope of insured people, and expanding the insurance conditions for people with pre-existing conditions, the draft for comments is clear, expanding the scope of commercial health insurance products applicable to individual tax preferential policies, and extending the scope of tax-advantaged-health insurance products to the main types of health insurance, including medical insurance, long-term care insurance and disease insurance.

Among them, the coverage of medical insurance will be further extended to people with pre-existing conditions, and shall not be denied insurance due to pre-existing medical conditions, or be excluded from liability; In terms of long-term care insurance, we encourage the development of products for the elderly, people with pre-existing conditions and other special groups. In addition, we encourage the development of products that can meet the lifelong security needs of working people, and explore payment methods suitable for home care, community care and institutional care. In terms of disease insurance, we encourage the development of products for low-income people, strengthen the integration with health management, reduce health risks, and reduce disease losses.

It is worth noting that this draft makes it clear that while expanding the scope of tax-advantaged health insurance products, it will no longer introduce "standardized provisions" for tax-advantaged health insurance products, and in addition to the requirements for underwriting people with pre-existing conditions, the product design will be handed over to market entities. Insurance companies are allowed to combine their own business capabilities and market demand to develop tax premium health insurance products with moderate insurance amounts, moderate prices and multi-level protection needs, and insurance companies are no longer required to return premiums when they are underpaid.

But at the same time, in order to reduce the business risks of insurance companies, the draft for comments also makes it clear that insurance companies can only carry out tax advantaged health insurance business if they meet the specific owner's equity and solvency adequacy standards, and insurance companies carrying out tax advantaged health insurance business should strengthen the retrospective analysis, timely adjust the deviation between the actual operation and actuarial assumptions, and ensure the rationality of product pricing. The insurance company shall do a good job of product letter and business submission, and submit the business report of the previous year's tax superior health insurance business to the CBRC before March 31 of each year.

Relax product design control and improve the problem of popularity

Zhu Junsheng, head of research at the China Insurance and Pension Research Center of Tsinghua University's Wudaokou School of Finance, told reporters that further relaxing the control of product form and pricing will help improve the problem of "good but not good" tax health insurance and promote the healthy development of the tax health insurance market.

"The previous tax premium health insurance development is very different from expectations, and it is not popular." The main reason is that there is too much product control, "Zhu Junsheng pointed out that the tax premium health insurance has put forward many requirements for product design. For example, allowing sick people to take out insurance and guaranteeing renewal; Not less than the annual payment limit of 200,000 yuan; No deductible shall be set, and the out-of-pocket proportion of the insured's medical expenses in line with the insurance contract shall not be higher than 10%; No waiting period; The simple loss rate shall not be less than 80% and the difference return of universal insurance.

On the surface, these provisions appear to be conducive to protecting consumer interests and increasing the value of tax-advantaged health insurance to the insured. But the problem is that "there is no free lunch," the rate needs to match the risk, and the expansion of insurance liability must also mean an increase in premiums. If the premium is not enough to cover the insurance liability, commercial insurance institutions must have no incentive to promote the product.

"Insurance companies are worried about the adverse choice of the insured, moral hazard and the complicated procedure of individual purchase of tax deductions, and generally do not sell in the individual insurance channel, but sell in the form of group insurance, so as to control risks and reduce costs." However, in the group insurance sales, the product has a certain overlap with the previous enterprise supplementary medical insurance, and the ideal sales objects of insurance companies often do not have a strong demand for tax premium health insurance, so that the development of tax premium health insurance has not achieved the expected effect, Zhu Junsheng said that the "loosening" of product form and pricing in the draft for comments. It can effectively stimulate the innovation enthusiasm of market players and promote market competition, so as to protect consumers' free choice right through competition, and then promote the healthy development of commercial health insurance market.

The draft also makes it clear that in order to give consumers on the market more rights to choose, consumers can no longer choose only one health insurance product from an insurance company, but can independently buy various types of health insurance products in multiple insurance companies according to their own needs. Boc's commercial Health Insurance Information platform will set up information accounts for policyholders to record all tax-advantage-related health insurance information insured by policyholders.

In order to stimulate market demand, it is suggested to continue to increase the duty-free allowance

In 2021, China's health insurance business premium income will be 844.7 billion yuan, and the commercial health insurance indemnity expenditure in that year will be 402.9 billion yuan, accounting for 5.33% of the total health expenditure and 19.23% of the personal health expenditure. In 2021, among the commercial health insurance payments in China, the medical insurance payments most related to medical expenditures are only 210.5 billion yuan, accounting for only 2.78% of the total health costs and only 10% of personal health expenditures.

All this shows that there is still a large space for commercial health insurance to solve personal health care expenditures. Zhu Junsheng said that through tax leverage, accelerate the development of commercial health insurance, improve the multi-level medical security system, and meet people's diversified and personalized health security needs through market-oriented, diversified and multi-level commercial health insurance. Especially in terms of tax saving efforts, tax-superior health insurance can tap further space.

At present, the tax premium health insurance is deducted before personal income tax according to the limit standard of 2400 yuan/year. Due to the limited amount of pre-tax deduction, the tax saving effect is not obvious, and it is difficult to substantially increase the demand for health insurance. International experience shows that the development of commercial health insurance is closely related to the strength of pre-tax deduction.

Zhu suggested that in order to give full play to the role of the market mechanism in China's medical security system, it is necessary to significantly increase the amount of pre-tax deduction for individuals to purchase commercial health insurance, and stimulate demand with tax incentives to promote the development of commercial health insurance. At the same time, the process of tax deduction should be simplified to facilitate the procedure operation in practice.

Source: 21st Century Business Herald