Tax Exemptions in Mediclaim Policy
In today’s times, buying a mediclaim policy has more relevance than ever before. Visiting the hospital becomes inevitable when you encounter a sudden medical emergency or undertake a planned treatment for an illness. Having a good mediclaim policy in India not only helps you deal with the huge hospitalization costs but also brings you many tax benefits under section 80D of the Income Tax Act.
The tax advantages are applicable when you buy an individual or a family floater mediclaim insurance plan. So, the next time you file your income tax returns, you can be assured as you would become eligible to claim a deduction under section 80D. While the Indian government is focussing on providing quality healthcare to its citizens, it is also providing tax benefits 80d provision for individuals as they can look forward to savings by opting for medical insurance.
Read further to understand how much you can save under the provisions of the Income Tax Act.
Deductions You Can Get Under Section 80D
Based on the mediclaim policy premium you pay, you are entitled to get various deductions under Section 80D. We discuss below the various scenarios and the applicable mediclaim deductions.
Scenario 1: You buy a mediclaim insurance policy covering you, your spouse and dependent children.
In this case, you can claim a deduction of Rs 25,000 in a financial year for the premium you pay towards the insurance policy. It is applicable if the insured persons under the policy are below the age of 60 years.
If anyone among you and your spouse is 60 years or above, you get a higher deduction of Rs 50,000.
Scenario 2: You opt for a mediclaim plan which covers you, your family and your parents
If your parents are below the age of 60, you get an additional deduction of Rs 25,000 in a financial year. In such a case, your total deduction for the year will amount to Rs 50,000 (Rs 25,000 + Rs 25,000).
Scenario 3: You opt for a mediclaim insurance covering you, your family and your senior citizen parents.
If your father or mother is a senior citizen, then you are eligible to get a deduction of Rs 50,000 in a financial year. Therefore, the total deduction which can be claimed is Rs 75,000 (Rs 25,000 + Rs 50,000) if you are below 60 years.
In case you are a senior citizen too, then the total mediclaim deduction amount is a maximum of Rs 1,00,000 (Rs 50,000 + Rs 50,000).
While referring to the deduction amount of Rs 50,000 for senior citizens in the above scenarios, the category of senior citizens also includes very senior citizens who are aged 80 years and above.
Deductions for Single Premium Mediclaim Policy
Under a single premium mediclaim policy, a person who is opting for an insurance policy with a validity of over one year makes a payment for the premium amount in a lump sum. That is, he pays the premium in a single year. As per a government provision announced in Budget 2018, such individuals can claim a deduction of a certain amount proportional to the number of years of the policy period. The mediclaim deduction amount is calculated by dividing the total premium amount paid in a lump sum by the number of years of the insurance policy.
For instance, if an individual is required to pay a premium of Rs 36,000 for a policy period of 2 years, he can avail of the deduction proportionately over the two-year period. The amount would be Rs 18,000 for each year.
It has to be noted that the deduction cannot exceed the limit of Rs.25,000 or Rs.50,000, as applicable.
What are the Exclusions under Section 80D?
While a policyholder is entitled to get Section 80D benefits on the health insurance premium paid, there are certain conditions when he or she cannot claim the deduction:
- The payment of premium must be made only by the taxpayer, not any third party.
- You are not entitled to receive tax benefits if the company pays the group health insurance premium.
- The premium paid on behalf of working children or for siblings or any member of your extended family is not eligible for tax deductions.
- Cash payments made for the premium do not qualify for the mediclaim Section 80D tax benefits.
You are eligible to get tax exemptions even if you receive medical treatment outside India. For ensuring this, your mediclaim insurance policy must have this provision and should be approved by the IRDAI. Otherwise, you cannot enjoy the mediclaim 80d benefits.