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Insurance Article

Lesser Known Facts about Tax Benefits on Health Insurance

January 01 2018
Health insurance provides tax benefits

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, if the age of any one of them is below 60. They need not be dependent on you. If your parents, or spouse are older than 60, you can claim tax benefit of up to ₹30,000.

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 ₹55,000. 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 ₹60,000.

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.

Related Article:

Should Health Insurance Be a Part of Financial Planning?
What Amount of Tax Does Health Insurance Save?

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