Tax Saving with Health Insurance
When you buy health insurance, you get several benefits, but according to the Income Tax Act of 1961, under section 80D, tax benefits are another advantage that you can get. With a proper health insurance plan in place, not only can you save yourself from a financial crisis in case of a medical emergency but can also save on income tax annually.
There are several tax instruments in the market today but a health insurance plan like a family medical insurance policy is one of the best. Health insurance offers tax benefits, cashless hospitalization, treatment expenses, and more, which is one of the main reasons why it is a highly preferred tax-saving product.
Norms under Section 80D offer tax benefits and exemptions based on the medical insurance premium you pay for policies covering your family (children and spouse) and your parents.
Tax Benefit of Health Insurance Premiums (80D)
If you are a policyholder, you can avail of deductions of up to INR 25,000 per year, subject to the medical insurance premium you pay. If you or your spouse are over 60 years of age, then the limit for tax benefits is increased up to INR 50,000, backed by additional coverage of INR 5,000 for health check-up expenses incurred by you, your spouse, parents, or dependent children. Here are some points that you should keep in mind:
>>Check: Tax Calculator
Preventive Health Check-ups
An additional benefit of coverage for preventive health check-ups costing up to INR 5,000 per year can be claimed.
Health Insurance Policy for Your Parents
You can claim additional tax-saving benefits under section 80D for the health insurance premium you pay for your parent(s), up to an amount of INR 50,000.
>>Check: 5 Ways to Save Your Taxable Income
No Tax Benefits for Cash Payments
You should pay your health insurance premium via certain banking modes, like credit or debit card, demand draft, cheque, or net banking. However, cash payments made for preventive health check-ups are acceptable for income tax deductions.
Health Insurance for Very Senior Citizens
Medical expenses for senior citizens who are more than 80 years old and are not covered under any health insurance policy are also eligible for tax deductions for an amount of up to INR 30,000, every financial year.
Section 80DDB for the Treatment of Critical Illness
Tax deductions of up to INR 40,000 or INR 60,000 for senior citizens and up to INR 80,000 for very senior citizens can be claimed in case medical expenses have been incurred due to a specified illness, like chronic renal failure, cancer, cardiac diseases, etc. These benefits can be claimed for you, your spouse, parents, children, or siblings. You will need to attach a certificate issued by your doctor when you file your income tax returns for your health insurance plan.
Section 80DD for the Treatment of a Dependent with Disability
If you have a dependent (spouse, sibling, parents or children) who suffers from a disability, you can avail deductions for up to INR 75,000 against expenses for treatment, rehabilitation, training, nursing, etc.
Section 80U for a Person with Disability
If you are the one who is suffering from disabilities, under section 80U, you are eligible for tax deductions up to INR 75,000 and in case it is a severe disability, the limit increases to INR 1.25 lakh.
Section 17: Income Tax Deductions for Medical Allowance
Apart from deductions for medical insurance premiums, medical expenses that your employer pays with your salary as the medical allowance are also eligible for deductions of up to INR 15,000 per financial year.
While your health insurance plan has a lot of tax benefits to offer, any premium you pay for your siblings is not eligible for tax deductions. Health insurance companies also offer customer care and support to help you apply for these tax benefits, which you can avail in case you have doubts regarding the same.
Care Health Insurance (Formerly Religare Health Insurance) has several comprehensive health insurance plans that provide extensive coverage and come with the assurance of a 7800+ hospital network for cashless treatment and an industry-best 93% claim settlement ratio.