TAX BENEFITS ON BUYING A HEALTH INSURANCE

Apart from getting protection and financial security a major advantage of health insurance is tax benefit. Medical insurance Section 80D of the Income Tax Act, 1961 in India allows everyone to avail tax benefits on the premium paid, whether the individual is self-employed or salaried. These tax benefits are not only available for self but also on health insurance for spouse, children, and parents.

 

 Health insurance Tax Benefits 

The different tax benefits that come along with the health insurance coverage usually include;

• Medical Insurance  exemption under 80D

As per Section 80D of the Income Tax Act, for a health insurance policy, the premium paid is deductible from the taxable income. The upper limit for the deductible amount is rupees 25,000 and can be extended to up to rupees 50,000 for senior citizens. This implies that the insured is now eligible to enjoy a deduction of up to rupees 75,000 from the taxable income. In cases, where the age of both the insured and parents is more than 60 years, the deductible amount can be extended up to rupees 1,00,000.

 

• Preventive Health check-ups deduction

You can save tax on preventive health check-ups on an annual basis. You can claim a maximum amount of rupees 5,000 under this feature for the age 60 or over the year.

 

• Tax  benefit on parents health insurance

For every financial year, one is eligible to avail tax exemption of up to rupees 25,000 on the premium that you pay. For parents that fall under the senior citizen age, the maximum limit even rises to rupees 50,000 annually. The limit additionally comprises rupees 5,000 towards yearly health check-ups forthe parents.

 

• Tax Benefits on HUF - Hindu Undivided Family

According to Section 80D of the Income Tax Act 1961 you have an up to rupees 25,000 for premium paid for self, family, or children and up to rupees 25,000 for premium paid for parents who are senior citizens can be claimed under this feature.

 

• Non-resident individual

NRI are eligible under section 80D for health insurance benefits. Up to rupees 25,000 claim amount for premium paid on health insurance for self, family, or children is allowed. Parents that are senior citizens are considered for tax benefits up to rupees 25,000.

 

• Specifically for senior citizens

Under the section of 80D,  you can claim a tax deduction on the premiums paid for your parent's health insurance.The tax deduction limit increases to Rs. 50,000 per fiscal year for senior citizens aged 60 and above during every year. Rupees 1 lakh for medical treatment is covered for a particular critical illness. If your parents are below 60, you can claim up to Rs 25,000. If they are above 60, you can claim up to Rs 50,000.

 

• Multi-year health insurance

Take tax benefits for multi-year health insurance policy in which you can avail dual benefits of getting discounts on premiums as well as tax benefits on a pro-rata basis in a proportionate way over the years for which the policy has been purchased. For instance, for a premium paid of rupees 30,000 on a three-year health insurance policy, one can avail a tax benefit of rupees 10,000.

Read More | ALL ABOUT INCOME TAX ACT SECTION 80D BENEFITS ON HEALTH INSURANCE

While aiming for tax benefits on health insurance policy, always look for plans that has a strong network of hospitals, smooth claim settlements process, good coverage benefits and robust customer care system.

 

Conclusion

Tax benefits can be availed on any and every health insurance plan chosen for self, children and parents.To avail tax benefits, the policy holder needs to submit premium payment receipt and a copy of your insurance policy, including the names of family members, ages, and relationship to the policyholder along with an 80D certificate from the insurance company. Remember to carefully read the terms and conditions of tax exemption under any health insurance policy and avoid paying premiums in cash to avail of tax deductions.

 

FAQs – Frequently asked questions.

Let's take a look at some frequent queries on Tax benefits while buying a health insurance;

 

Q1. Can I pay my health insurance policy premium in cash to avail tax benefits?

Ans. No, you are not allowed to pay premium in cash to avail tax benefit on health insurance. Make sure to choose any other mode of payment like internet banking, cheque, credit and debit card, or bank demand draft.

 

Q2. Can I avail tax benefits on health insurance policy covering relatives other than my spouse, children, and parents?

Ans. No, according to Section 80D of the Income Tax Act in India, you are allowed to avail tax benefits only on the premium paid on health insurance for self, spouse, children, and parents. For brother, sister, grandfather, grandmother and other relatives, thetax cannot be claimed as a deduction for availing benefits.  

 

Q3. Are there any tax deductions on treatment of certain diseases under health insurance plans?

Ans. Yes, the expenses incurred on the treatment of some specific diseases are tax-deductible. These diseases include cancer, Parkinson's disease, AIDS, neurological disorders, chronic renal failure, haemophilia and thalassemia.