All About Health Insurance Tax Benefits
Medical emergencies can arise anytime, it is better to be safe than sorry and it is no different when it comes to medical insurance. Health Insurance is a must-have plan and the government encourages everyone to buy health insurance and allows you to enjoy a tax deduction on it.
If your annual income falls under tax liability, then you should have a health insurance plan not only because you are eligible enough to buy it but also because you can claim income tax exemption to some extent. Every health insurance policy available in the market allows you to avail of tax benefits on a premium payment of health insurance policy whether it's a floater plan, individual plan, or senior citizen plan.
The Income Tax Act, 1961 allows health insurance policyholders tax deductions which reduces the amount of tax payable. In order to make the most out of these deductions, it is important to know more about relevant sections of the Income Tax Act, of 1961.
Health Insurance Tax Benefits
The premium amount a policyholder pays for a health insurance policy is eligible for tax deductions as per Section 80D of the Income Tax Act.
As per section 80D of the Income Tax Act, an individual or a HUF can claim a section 80D deduction for the following:
- Payment of health insurance premium.
- Contribution of an individual taxpayer to a government health scheme.
- The sum paid by an individual taxpayer for a health check-up.
- Expenses incurred to keep health insurance for a senior citizen.
The limit of tax deductions in different types of health insurance plans is mentioned in the table below.
|
Insured Party |
Members below 60 years |
Members above 60 years |
|
Family /HUF (Hindu Undivided Family) |
If the entire family belongs to the under 60 years age category then the deductible tax amount would be ₹25,000. |
If the whole family or even one person of the family belongs to the above 60 years age category then they would get a ₹50,000 tax deduction. |
|
Individual Plan |
If the age of an individual policyholder is below 60, then the deductible tax amount would be ₹25000. |
If the age of an individual policyholder is above 60 years, then the tax amount deductible would be ₹50,000. |
If the individual policyholder also pays a mediclaim premium for their parents, then they are eligible for an additional tax deduction of Rs. 25,000 (Rs. 50,000 if parents are senior citizens).
One important thing to know is that you cannot claim a tax deduction if the premium is paid by cash, it can only be claimed if the premium is paid using any other mode other than cash i.e. cashless payment.
Conclusion
A suitable health insurance plan will ensure that you and your dependents are taken care of in the hour of need, be it health checkups or hospitalisation. You don't need to deplete your savings on medical expenses when you have a health insurance policy to reimburse your expenses. Also, you can enjoy tax benefits on the premium paid for the policy.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
