Health is said to be wealth. Well, the government of India has devised a way to ensure you buy a reliable health insurance policy and stay protected in times of need. The health insurance policy is just as important as a life insurance policy and should be picked keeping in mind your guardians and dependents.
Getting medical insurance is a simple process. The buyer of the policy pays a timely premium to the insurer and in case of need, the insurer covers the insured persons financially. A little lesser known fact to many is that one can claim medical insurance tax benefit, having said that, here is a sneak peek into various ways in which you can legally save tax or instances where medical insurance tax benefit can be availed.
As per section 80D of the Income Tax Act, you can avail tax deductions on premium paid towards health insurance for self, spouse, dependent parents, and dependent children. The sibling is not covered under this section. Limits of deduction vary with the age of self, spouse, and dependent parents.
Whenever you are buying a health insurance policy, the primary concern should be the coverage and the best possible policies that will guarantee your safety and the safety of your loved ones.
Medical insurance can reduce your tax liability on your income for a financial year. However, there are a few key things to be remembered when you are looking to do so.
- You can avail of tax reductions on preventive health check-ups You can claim expenses insured for preventive health check-ups up to 5,000 rupees for your parents who are above 60 years of age.
- You can avail of tax benefit on premium paid for medical insurance for parents, irrespective of whether your parents are dependents or not. However, you need to make sure they do not have an insurance policy in place for themselves.
- On the other hand, if your children aren’t dependents then, you cannot avail tax benefits for their health insurance premium payments. They can claim the same on their annual income.
- Under section 80D, you can avail of tax benefits up to 80,000 rupees, if you are below 60 years of age and your parents are senior citizens (above 60 years of age).
- If you are a senior citizen, then naturally, your parents must be more than 60 years of age too. In case you are paying a premium towards their health insurance you are entitled to tax exemption above 1,00,000 rupees.
- Health insurance benefits can be availed only by individuals and HUFs (Hindu Undivided Family). This option is not extended to corporate firms.
- Tax deductions can only be availed if the payment is done through DD, cheque, online banking, and debit or credit card. Cash installments of the premium are not eligible for tax benefits.
- If you undertake the financial responsibility of incurring the expense of a dependent handicap, the tax-deductible limit is 50,000 rupees. For a few, more serious cases, it is extended up to 1,00,000 rupees.
- There are few mentioned diseases, the treatment for which is tax-deductible. For people below 60 years of age, the upper limit is 40,000 rupees. Whereas, the upper limit for senior citizens is 1,00,000 rupees. Diseases covered under section 80DDB are cancer (malignant), AIDS, neurological disorders, Parkinson’s disease, hemophilia, thalassemia, and chronic renal failure. The complete list of such diseases is given in rule 11D.
- Taxpayers are not liable to receive any benefits on the service charge and cess charges levied on the premium payment.
- Group Health Insurance policies are not liable to attract any tax benefits. However, if you are paying extra to enhance the health insurance group cover, they can claim a deduction for the extra amount.
- You can avail of tax exemptions for treatments done outside the country if it is a part of your health insurance policy and if the insurer is registered with the Insurance Regulatory Authority of India.
- You can avail of tax exemptions for more than one insurance policy if all premiums are paid and all eligibility criteria are met as per the insurer as well as according to section 80D.
While buying health insurance it is more important to focus on your needs rather than the savings. Perfect health is the path to prosperity. With the help of this information, you can ensure every penny saved is a penny earned!