Recently, we came across news in an online Publication, mydigitalfc.com

Health insurance policyholders may face problems as I-T dept seals TPA accounts

Several health insurance policyholders may face problems in getting cashless hospitalisation as the income tax department has sealed accounts of several third party intermediaries (TPAs) for non-payment of tax deducted at source (TDS).

Industry officials say TPAs whose accounts have been sealed are Mumbai headquartered Pa­ramount Health Services, United Healthcare Services, Dedic­ated Health Care Ser­vices and Health India TPA.

Industry sources said sealing of accounts means that the TPA cannot render its services till the issue is settled. TPAs are inte­rm­ediar­ies between the ins­ured, ho­spital and the insu­rance fi­rm and facilitate hospitali­sation of the insu­red by pay­ing the hospital from fu­nds allocated to them by insurance firms.

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Experts from Medimanage.com give their opinion:

Sudhir Sarnobat:

Sudhir Sarnobat from Medimanage.com

This is purely the area of failure to fulfil the obligation of deducting the TDS from the payments made to Hospital.

Though the insurance claims pay-outs to individuals are not treated as income, the pay-outs to hospital are treated as income by the hospital & the TDS should have been applied. This was not done by the TPAs & hence, the Income Tax department has taken this action.

As the TPAs in South have been able to manage a Stay on the order, there is a precedent & the issue should get resolved without any major disruptions. Also as IRDA (which regulates TPAs) & Income Tax Dept. both report to same ministry, an amicable solution can be identified to ensure that policy holder is not hassled unnecessarily.