Things You Probably Did Not Know about Tax Benefits on Health Insurance
A recent study by a health services company showed that 62% of Indians pay their medical expenses from their own pockets. Instead of paying from your own resources, you can buy a health insurance to cover your medical expenses. However, not many are aware that it can also help save taxes. Here is how health insurance premiums can reduce your tax burden.
Health Insurance Premiums
You can save taxes by paying health insurance premium not just for yourself but also your spouse, children and parents. The maximum deduction under section 80D is ₹25,000 a year for policies purchased for self, spouse & dependent children. The age of all family members should be below 60. For senior citizens the limit is ₹50,000 for self and spouse.
For parents being less than 60 years of age the maximum deduction under section 80D is ₹25,000, however parents are above 60 years of age the maximum deduction under section 80D is ₹50,000
If your spouse and you are below 60 years of age, but your parents are 60 and above, then you can claim a total deduction of up to ₹75,000. Similarly, if you are 60-years old or more, and your spouse or parents are also 60 and above, then you can claim a total deduction of up to ₹100,000.
Health Check-Ups
The preventive health check-ups can get you a benefit of up to ₹5,000 u/s 80D, till the maximum limit is reached. For example, if you pay premium for a health insurance of ₹22,000, and pay ₹3000 for health check-ups, then you can claim a deduction of ₹25,000 u/s 80D.
Indemnity and Fixed Benefit Health Insurance Plans
There are two types of health insurance policies.
Indemnity-based health insurance plans cover the cost of medical expenses during hospitalisation. These plans include mediclaim and family floater plans.
Defined-benefit health insurance plans pay a lump sum amount irrespective of the actual hospital expense. These plans include Critical Illness Cover and daily hospital cash plan.
Premiums for both indemnity-based and defined-benefit health insurance, qualify for tax deduction u/s 80D.
Non-Cash Payment
Cash payments for health insurance premiums do not qualify for tax benefits u/s 80D. To get tax benefits, you can pay through net banking, credit card, cheque, draft and other means. You can however pay cash for preventive health check-up and get tax benefits.
So get a health insurance policy for yourself and your family, to cover not only all healthcare-related expenses but also to get good tax benefits.
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What Amount of Tax Does Health Insurance Save?