- Rs. 5 Lakh Coverage @ Rs. 12.9/Day
- 7 Lakh+ Happy Customers
- 100%Free Health Check-up
- 10,000+Hospitals for Cashless Treatment
We promise limited calls
After life insurance, health insurance is perhaps the most imperative plan one should have in his/her portfolio. It works in a simple manner, the insured pays regular premiums to the insurer in return of which the insurer promises to cover him financially in case of a medical contingency. But there’s more to health insurance than just reimbursing the individual for the expenses he/she incurs on his/her medical treatment. Just like life insurance, a health plan acts as a very efficient tax saving tool. It provides the insured substantial tax exemption under section 80D.
Despite the medical benefits of health insurance, a policy reduces your annual income tax liability subject to the premium paid for the same. In fact, the premium paid for not only you and your family but also your parents makes you eligible for income tax exemption under section 80D of Income Tax Act, 1961.
As per Section 80D of the income tax act, the premium paid towards a health insurance plan is deductible from the taxable income. The upper limit for this deductible amount is Rs 15,000 and is extendible to Rs 20,000 for senior citizens. Thus, it enables an individual to enjoy a maximum deduction of Rs 35,000 from the taxable income. In rare cases, the age of both the proposer and his parents is above 65 years. The deductible amount in such cases extends up to Rs 40,000 (Rs 20,000 + Rs 20,000)
If your annual income falls under tax liability, then you must have a health insurance policy not only because you are eligible enough to purchase one but also because you can claim income tax exemption to a certain extent. Want to know how premium paid for health insurance of your parents reduces tax liability? This article will let you know how to save on tax, based on the premium paid for health insurance of your parents.
Every health insurance policy permits you to avail tax benefit on the premium payment of health insurance policy whether it belongs to you, your spouse, children, or parents. When you buy a health insurance policy for your parents, you must ensure that you include adequate coverage. Instead of looking for a higher tax benefit, try to opt for a policy that offers coverage for possible medical conditions with reference to your parents. Doing this will help you to get the maximum possible benefit out of the health insurance policy.
Now, read further to know how you can avail tax benefit, based on the premium paid for health insurance for your parents.
The premium paid for any health insurance also provides tax benefits by reducing your annual taxable income, and therefore, your tax liability for a particular financial year.
Tax Benefits under Section 80D of the Income Tax
As per Income tax laws for the financial year 2015-2016, there are 5 important things to know about the tax benefit of health insurance plans.
- Under Section 80D of the Income Tax Act, you can avail the tax benefit on premium paid for the health insurance for your parents, irrespective of the fact that your parents are dependent on you or not.
- Under Section 80D of the Income Tax Act, you can avail the tax benefit up to Rs. 30,000 (including preventive health checkups annually), based on the premium payment made by you for health insurance of your parents where your parents are senior citizens (60 years or more) and you are below 60 years.
- In case your age is 60 years or above and you still pay the premium for a health insurance policy of any of your parents (who must be senior citizens too), you can avail tax exemption up to Rs. 60,000.
- Income Tax Law also permits you to avail tax exemption up to Rs.5000 for the expenses incurred for preventive health checkups of your parents who are above 60 years.
- In case your age is 60 years or above and you take care of the preventive health checkups of your parents who are 80 years or above, you are eligible to avail tax benefits up to Rs. 65,000.
Let us see a table that will demonstrate the tax benefit on health insurance premium of parents in a better way:
Tax Exemption on the Premiums Paid
Tax Relaxation on Preventive Health Check-up
Total Tax Exemption
Where you are below 60 years and your parents are senior citizens (60 or above)
Rs. 25,000 + Rs. 30,000
Where you are 60 years or above and your parents are senior citizens (60 or above)
Rs. 30,000 + Rs. 30,000
Hope the aforementioned information must have helped you to know how much your tax liability is this annual year and how you can save on income tax based on the premium paid for a health insurance policy for your parents. Now, read further to know some important things that will help you to maximize your tax saving when you buy a health insurance policy for your parents.
Being a caring daughter or son of your parents, buying a health insurance policy that offers suitable protection is a difficult task. A health insurance policy should help you financially by waving off the sky-rocketing medical bills when they face any medical emergency.
|You may like to Read: Section 80C|
Let Us Understand It with an Example:
Upper Cap of Deduction When the Plan is Bought for Self, Spouse, Children
Upper Cap of Deduction When the Plan is Bought for Parents
Total Deduction from the Taxable Income
Proposer’s parents haven’t still attained the age of 65 years
Proposer’s parents have attained the age of 65 years
Mr. Tarique is a businessman aged 40 years. He buys two health insurance plans, one for his spouse with an annual premium of Rs 12,000 and the other one for his father aged 67 years with an annual premium of Rs 18,000. Thus, the total deductible amount from his taxable income sums up to Rs 30,000 (12,000 + 18,000).
|You may also like to Read: Tax Exemption on Health Insurance|
Understand Their Needs
Analyze their requirements. For example, in case any of your parents need a surgery or treatment in the next two years, you must find a health insurance policy that covers the expenses of that particular surgery. Never be dependent on your employers’ group health insurance for your parents. It may partially or not cover the surgery that is important for your ageing parents.
Opt for a Lifelong Policy
It is recommended to choose a health insurance policy that covers your parents for their entire life. Make sure you buy a health insurance policy for your parents before the age of 69 years, because buying it after this age limit is extremely difficult.
No Medical Check up Till Age of 69
Insurers offer health insurance policies that do not require any medical check up for senior citizens who are below 69 years of age. You can opt for such policies, in case you do not live with your parents and it is difficult for them to get the mandatory tests done on their own.
Look for a Specialist Mediclaim Advisor
Look for an agent who specializes in offering health insurance policies and can assist you professionally when you need to file a claim. An advisor will also help you to find the best health insurance policy for your parents.
Renewal Ceasing Age
Make sure you notice the Renewal Ceasing age, in case you are planning to buy a mediclaim policy. Renewal ceasing age is the age when the coverage will come to an end and cannot be renewed any longer. For instance, some senior citizen health insurance policies cease renewals at the age of 70 years.
Declare Current Health History
Make sure you share the health history of your parents with the insurer honestly before buying any policy. Any misrepresentation or wrong information in the proposal form regarding the medical history of your parents may result in cancellation of the policy. Please ensure that all the facts are true and clear.
Pre-Requisites for Section 80D
Health insurance benefits under section 80D are available only to individuals and Hindu Undivided Family (HUFs). It is of not available to corporate firms. Also, the benefits can be availed only when the payment of premium is made through cheque or DD. It is not applicable when the payment is made through cash.
Section 80D has been evolved into two more sections to serve specific insurance needs.
- Section 80DD - If an individual undertakes the financial responsibility of bearing the expenses for treatment of a dependent handicap, the tax deductible amount extends up to Rs 50,000. For severe cases, this limit is further extended to Rs 1,00,000.
- Section 80DDB- The expenses incurred by an individual on the treatment of certain diseases (as given below) are tax deductible. The upper cap on this amount is Rs 40,000 (for those aged below 65 years) and Rs 60,000 (for those aged above 65 years). Diseases covered under section 80DDB are cancer (malignant), AIDS, neurological disorders, Parkinson’s disease, hemophilia, thalassaemia and chronic renal failure.
Buying a health insurance policy is not a financial investment, but it is a shield that protects you against several unfortunate events. Always consider the coverage and benefits of the health insurance policy for your parents. However, any premium paid for health insurance policy helps in tax saving. Therefore, make sure you consider all the aforementioned tips while buying a health insurance policy for your parents.
Most Searched Topics
- Top 5 Best Mutual Fund Plans to Invest in India in 2017
- Section 80D Deduction for A.Y 2016-17
- Section 80C Deduction for A.Y 2016-17
- What is Form 16 & How To Download It
- Income Tax Exemptions for Salaried Employees
- Section 80D Mediclaim Income Tax Deduction for Individual
- Section 80D of ITA: Deductions for Medical Insurance and Preventive Health Checkups
- How to Check Income Tax Return Status Online?
- Income Tax Planning For Salaried Employees in India
- Income Tax Benefits in FY 2016-17 on Home Loan Interest
- Income Tax Deductions under Section 80D of Income Tax Act, 1961
- Advantages and Disadvantages of the Tax-Saving Fixed Deposits
- How to Pay Income Tax Online in India 2017
- How to Save Tax on Salary?
- Tax Exemption on Health Insurance under Section 80D
- Compute Your Income Tax through the Income Tax Calculator
- Section 80D Tax Deduction For Medical Insurance Premium And Mediclaim Reimbursement Allowance Under Section 10
- How to Save Tax with Health Insurance?
- Know about Mediclaim Deduction for the AY 2016-17 and Plan your Future with us at Policy Bazaar!
- Income Tax Filing For the Freelancers
- How to File Income Tax Return Using Form 16
- Understanding Salaried Income and Its Tax Computation
- An Insight into Section 80D Deductions for Health Insurance Premium and Checkups
- Systematic Investment Plan (SIP) - Features, Benefits & Process of SIP
- How to Send Your ITR-V to CPC Bangalore
- How to Check ITR-V Receipt Status?
- How to Make Corrections to TDS Returns?
- eFiling Income Tax
- What is TDS (Tax Deducted at Source)?
- Tax Benefits on Children's School Fees
- How To Save Income Tax on House Rent Allowance
- Income Tax Slabs Rates for Financial Year 2016-17
- Handling Income Tax Notices form IT- Department
- What is the Difference between AY and FY?
- How to file Income Tax Return Online in India?
- Tax Exemption on Insurance Premiums
- Learning to Calculate Income Tax Levied on Salary Income
- How to View Filed TDS Statement on Income Tax Website?
- Best ways to save tax - Income Tax Saving Tips
- Take Home, Net Gross Salary vs CTC
- How to get Income Tax Return Form?
- Let's Talk About Part A and Part B in Form 16
- What is Reliance Tax Saver Plan?
- Advance Tax Payment Guide
- 5 Common Tax-Saving Mistakes and How to Avoid them
- Easy & Simple Steps to Upload TDS Returns Online
- NRI's without Pan: How to Avoid Higher TDS
- Complexity of Income Tax on Taxable Income
- All You Need To Know About From 27C
- TDS Will Not be deducted on Interest Paid to MUDRA
- Calculating Estimated Business Taxes
- Why Should You E-File Your Tax Returns
- Control the Currency with Policy Bazaar: Income Tax Guide For Start-ups
- Missed the Tax Filing Deadline? Here's what you can do about it
- File It Right: How to Avoid Rejection of Your ITR-V
- Tips for Startups while Generating Form 16
- How to Reduce the Burden of Income Tax and Increase Your Take-Home Salary?
- Useful Tips on Tax-Planning in India
- Income Tax Refund - Basics, Process
- Income Tax Deductions under Section 80
- Best Way to Calculate Your HRA (House Rent Allowance)
- Most Read
- How to Revive Lapsed LIC Insurance Policy Online
Date: 15 September 2017
- Tip to turn Habits into Healthy Ones: The Perfect Health Guide for Women
Date: 15 September 2017
- How Insurance Sector Faces Initial Hiccups Post GST
Date: 15 September 2017
- How to Save Premium Cost on your Life Insurance Purchase
Date: 13 September 2017
- Why Renewal of the Term Insurance Policy is Important?
Date: 11 September 2017
- Best 5 LIC Policies To Invest in 2017
Views : 966754
- LIC Policy Status: Check LIC Policy Details and Statement Online
Views : 911850
- Best Term Insurance Plans in India with Claim Settlement Ratio
Views : 365719
- A Quick Guide To Post Office Monthly Income Scheme
Views : 355266
- Best Health Insurance Plans in India
Views : 305998