How to Claim Tax Benefits on Medical Insurance?
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A sound health insurance policy provides you and your family a comprehensive medical coverage and supports you in your tough time. It bears your medical expenses and avail the best possible treatment. Its benefits do not limit here, along with the right treatment, financial security; you are entitled to get tax deductions on it under Mediclaim 80D of the Income Tax Act. This is why investing in good health insurance offers you a double bonanza. In this article, you can read how you can avail health insurance tax benefits.
Premium is the amount that you have to pay to the insurance company against the sum insured. Under Mediclaim 80D of the Income Tax Act, the premium paid for the health insurance policy for self, dependent parents, spouse, and children is exempt from tax. You can claim Rs.25,000 for individual and family health insurance and up to Rs 50,000 for senior citizens per year.
You should know that under your health insurance policy, you are entitled for annual health check-up. It include blood sugar tests, urine tests, cholesterol tests, ECGs, etc. According to Mediclaim 80D, you can avail tax reduction on annual health checkups up to Rs. 5,000.
Premium paid against health insurance for very senior citizens like 80 years, treatment of specified illnesses, and treatment of a dependent with a disability, are all come under tax deduction. This reduces your taxable income low that reflects less tax liability.
Health insurance serves a dual purpose, it protects you from the financial loss due to unforeseen medical emergencies and secondly, it saves your hard-earned money. With the rise in health care costs and medical inflation, medical insurance should definitely feature in your investment portfolio. The Indian government also encouraging citizens to opt for health insurance that allows saving a good amount of money on tax under section 80D. The premium paid against a health insurance policy is exempted from taxation. You can read what section 80D is and how health insurance avails you tax benefits under this act.
Section 80D comes under the Income Tax Act of India that allows tax deductions from the gross taxable income for the payment of health insurance premium paid by an individual or the Hindu Undivided Family. Premium paid against health insurance policy for self, dependent parents, spouse, and children are all exempted from tax. Under this section, health insurance premiums, contributions to the Central Government Health Scheme, and preventive health check-up can be claimed for a tax deduction. However, the quantum of tax benefit in individual and family health insurance depends on the age and income of the insured. It also provides tax benefits by reducing taxable income and shows less tax liability.
In order to have more clarity on tax deductions claim, under section 80D, you can read this example.
Akash, a 40-year-old software engineer has taken a medical insurance plan for himself and his father, whose age is 60 years. He pays insurance of INR 30,000 and INR 35,000, respectively. Now the maximum amount of claim he can file under section 80D is:
In case of policy for self: He can claim up to INR 25,000 for the premium paid on his policy.
In case of policy for senior citizens: He can claim up to INR 50,000 in total. Therefore, the total deduction that he can claim for the premium paid for self and for his dependent father is INR 60,000 for the year.
Let’s understand how you can claim tax under section 80D of the Income Tax Act on the amount of health insurance premium.
Claim on senior citizen policy:
If you buy health insurance for parents above 60 years, then you can also avail of an additional deduction up to INR 50,000.
Health insurance has become the need of an hour. Investment in single health insurance and family Health Insurance acts as your savior in your bad times. It not only supports you in a financial crunch but also helps to save more. So, if you are still away from health insurance, then you can consider health insurance policies offered by Care Health Insurance (Formerly Religare Health Insurance) with maximum coverage at affordable premiums and enjoy a plethora of its tax benefits.
Claim on premium:
If you are below 60 years of age, then you can claim a tax deduction up to INR 25,000 on the premium paid against health insurance for self, and if you are above 60 years of age, then you can claim up to INR 30,000 per year.
Claim on annual preventive health check-ups:
According to Section 80D, you can avail tax reduction on annual health checkups up to INR 5000 per year.
The following steps can help maximize the health insurance tax benefits for the entire family:
Tax benefits for health insurance premiums can be availed only if the payment is made through certain modes. They include a demand draft, debit card, net banking, or cheque. For preventive health check-ups, cash payments are applicable for tax deductions.