Health Insurance is one of the most necessary investments at a time where the cost of living is spiraling., including medical costs. Apart from the insurance cover provided by a health insurance plan, it can also double up as a great investment option, given that it also offers great tax benefits.
Here’s how health insurance can be a great boon when it comes to tax:
The premium paid by an individual for health insurance reduces the taxable income and hence the tax liability. Individuals who pay their own health insurance and are under 60 years of age, can avail of a tax exemption of up to INR 25,000 per year. If they are above 60 years of age, they are eligible for deductions up to INR 30,000. Furthermore, if they also pay the health insurance of their elderly parents under 60 years of age, they can claim a further exemption of up to INR 25,000 annually and INR 30,000 if their parents fall under the senior citizens category. However, only premiums paid via internet banking, debit card, credit card, cheque or draft will be considered, and not those paid in cash.
Health Insurance types
Tax benefits are provided to indemnity-based plans like family floater plans and mediclaim but also defined plans like a critical illness plan or a daily hospital cash policy of health insurance and general insurance companies alike.
According to the provisions of Section 80D, the tax benefits are on the premium that is paid towards health insurance but it does not specify that the policy needs to specifically be bought from a health insurance company. Thus, individuals can instead avail of health insurance policies provided by life insurance companies, if they choose. The premium paid towards the critical illness or medical insurance riders of a life insurance policy also provide tax benefits.
Individuals can also avail of a benefit of up to INR 5,000 for preventive health check-ups within a maximum limit of INR 25,000 or INR 30,000. Due to cases of lifestyle-related ailments increasing over time, many medical chains and hospitals provide preventive health check-up packages and offers. Cash payments are also eligible for tax savings.
Differently-abled people can claim a tax rebate of up to INR 75,000 per year if they have 40 percent or more disability, depending on the severity of their condition. In the case of those individuals with 80 percent disability, this can go up to INR 1,25,000. These respective deductions can also be availed of in the case of individuals who look after differently-abled dependents, if the dependent in question has not already claimed these deductions themselves.
Medical treatment for specific ailments
Under Section 80DDB, individuals can avail of deductions on medical treatment for specific ailments. These diseases include neurological diseases with a disability of 40 percent or more, AIDS, Parkinson’s disease, malignant cancers, Hemophilia, chronic renal failure and Thalassemia, to name a few. Those below 60 years of age can claim up to INR 40,000 and those above 60 can claim up to INR 60,000. Seniors above 80 also stand to benefit, with a limit of up to INR 80,000. Those who cater to dependents can also claim these benefits.
There are benefits provided to individuals for tax savings under medical insurance plans. One aspect that an individual needs to bear in mind is that if they are not eligible to avail of tax deductions if they receive the reimbursement for treatment from their employer or insurance company. However, if they have received only partial reimbursement, it is only then that they can avail of the deduction for the remaining amount.
- A Complete Reference: Buying a Critical Illness Insurance Policy
Date: 24 May 2017
- Know What Your Insurance Agent Might Be Hiding From You
Date: 16 May 2017
- Myth Busted! Health Insurance for the Disabled in India
Date: 16 May 2017
- Your Preferred Guide to Find the Best Healthcare Policy in 2017
Date: 07 April 2017
- Why Should You Create a Foolproof Financial Plan for Your Maternity Leave?
Date: 24 March 2017
- Best Health Insurance Plans in India
Views : 209536
- Top Medical Insurance Policies by Indian Health Insurers
Views : 160241
- List of Health Insurance Companies in India
Views : 104787
- Top 10 Health Insurance Companies in India
Views : 47216
- Top 5 Maternity Insurance Plans
Views : 41062