Health Insurance Tax Benefit

One of the major benefits of having a health insurance plan, apart from getting coverage for healthcare expenses is, that it provides tax benefits to the insured, under Section 80D of the Income Tax Act, 1961. Whether self-employed or salaried, everyone can avail tax benefits on the premium paid.

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**Tax benefits are subject to changes in Income Tax Act.

When you buy a health insurance plan, you become eligible for tax exemption on the premium paid for a particular policy, under Section 80D of the Income Tax Act. Tax benefits can be enjoyed if you paid the premium to include self, spouse, dependent children, and dependent parents.

Tax Saving Options with Health Insurance

Apart from reimbursing expenses incurred on medical treatment, health insurance plans also act as an efficient tax-saving tool. The policyholders qualify for substantial tax deduction under Section 80D of the Income Tax Act, 1961 on the health insurance premiums paid to buy health insurance policies. Whether self-employed or salaried, the policyholders can avail tax benefits under the Income Tax Act. Availing tax benefits reduces the annual tax liability of the policyholder thereby offering him/her dual benefit of health coverage as well as tax deductions.

Every health insurance allows you to avail tax benefits on the premium paid for it whether the policy belongs to the proposer, his/her spouse, children, or parents. When buying a health insurance policy for parents, one must make sure to get the required coverage for all the possible medical conditions instead of just looking for higher tax benefits. This will help in getting the most suitable health insurance policy.

Income Tax Exemption Under Section 80D

As per Section 80D of the Income Tax Act, the premium paid for a health insurance policy is deductible from the taxable income. The upper limit for the deductible amount is Rs. 25,000 and can be extended for up to Rs. 50,000 for senior citizens (with effect from 1 April, 2018). This means that an individual can enjoy a deduction of up to Rs. 75,000 from the taxable income. In rare cases, when the age of both the proposer and his parents is more than 60 years, the deductible amount can extend up to Rs. 1,00,000 (Rs. 50,000+Rs. 50,000).

Deduction on Preventive Medical Checkups

You can save tax on preventive health checkups on a yearly basis. Under this feature, you can claim a maximum amount of Rs. 5,000.

Save Income Tax for Health Insurance Premiums Paid for Parents under Section 80D

You can enjoy a tax exemption of up to Rs. 25,000 every financial year against the premium paid for guardians. In case, your parents come under the senior citizen category, then the maximum limit extends up to Rs. 50,000 a year. The limit additionally comprises Rs. 5,000 towards annual health checkups of your parents.

Different Scenarios to Save Tax Under Section 80D

Scenarios indicating eligibility and deduction for saving tax under Section 80D:

1. You and your parents below 60 years - Up to Rs. 25,000 claim allowed for self, family and children. An additional Rs. 25,000 claim allowed against the premium paid for parents. Total amount = Rs. 50,000.

2. You and your family below 60, but parents above 60 years - Up to Rs. 25,000 claim allowed against the premium paid for self, family, and children. An additional Rs. 50,000 claim amount for the premium paid for parents. Total amount = Rs. 75,000.

3. You, your family and parents above 60 years - Up to Rs. 50,000 claim against the premium paid for self, family, and children. Moreover, up to Rs. 50,000 claim amount for the premium paid for parents. Total amount = Rs. 1,00,000.

4. HUF (Hindu Undivided Family) - Up to Rs. 25,000 (premium paid for self, family, and children) and up to Rs. 25,000 (premium paid for parents) can be claimed. Total amount = Rs. 25,000 as tax benefits for parents available only if they are senior citizens.

5. Non-resident individual = Up to Rs. 25,000 claim amount for premium for self, family, and children. Parents considered for tax benefits only if they are senior citizens. Thus, the total amount = Rs. 25,000

Income Tax Saving for Senior Citizens

Following tax exemption under Section 80D on premium for senior citizens (60 years old or more, but below 80 years) is allowed.

  1. Claim deduction of up to Rs. 50,000 allowed on medical insurance premium during every fiscal year
  2. Rs.1 Lakh for medical treatment of particular critical illnesses
  3. If a super-aged father lacks insurance and mother is a senior citizen, a tax deduction of Rs. 50,000 can be claimed.

Documents Required to Claim Income Tax Deduction

To claim income tax deduction, you are required to submit your premium payment receipt and your insurance policy copy that must have the name of your family members, their age, and relation with you. In case the premium is paid for parents, then you as the proposer must ask for an 80D certificate from the insurance company, which will require you to provide the payment details in your name.

Important Points to Remember

  • Carefully read the terms and conditions related to tax exemption under your health insurance policy.
  • Avoid paying health insurance premiums in cash to avail tax deduction.
  • In case you buy a health insurance policy for yourself and parents, and all of you are senior citizens, then the maximum deduction under Section 80D can be availed of Rs. 1 Lakh.
  • Benefits under Section 80D can be availed in addition to tax breaks of up to Rs. 1.5 Lakh in Section 80C.

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FAQ About

Yes, you will be entitled to tax benefits, irrespective of your policy type purchase.

Yes, you can avail tax benefits of up to Rs. 5,000 for preventative health check-ups under Section 80D of the Income Tax Act on a yearly basis.

No, you will not be allowed. If you want to be eligible for tax benefits, it is advised to pay your policy premium in payment modes other than cash. You can either choose internet banking, cheque, credit/debit card, or bank demand draft for premium payment purposes.

According to Section 80D of the Income Tax Act, you are allowed to avail tax benefits only on the premium paid for self, spouse, dependent children, and parents. Premium paid towards a brother, sister, grandfather, grandmother and other relatives cannot be claimed as a deduction for availing tax benefits.

To learn more about tax benefits, call our experts at 7551196989. We will also help you gather correct information about health insurance plans for you and your parents and continue to offer assistance even after you buy a policy for you.

As per Section 80DDB, the expenses incurred by an individual on the treatment of some specific diseases are tax-deductible. These diseases include cancer (malignant), AIDS, Parkinson's disease, neurological disorders, hemophilia, chronic renal failure, and thalassemia. For people aged below 60 years, the upper limit for tax benefit is Rs. 40,000 and for those aged above 60 years, it is of Rs. 1 lakh.

To learn more about tax benefits, call our experts at 7551196989. We will also help you gather correct information about health insurance plans for you and your parents and continue to offer assistance even after you buy a policy for you.

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