Know Facts About Tax Benefits in Health Insurance
A health insurance Plan is an absolute necessity as it not only provides protection against medical emergencies but also gives tax benefits under section 80D. Tax exemption is offered on health insurance policies bought for self, spouse, children, and parents. Most financial planners recommend having adequate health insurance coverage as a primary step toward good financial planning.
Lesser Known Facts About Tax Benefits in Health Insurance
Highlighted below are crucial facts regarding tax benefits on health insurance according to the Income Tax Act:
1. Cover for Parents: You can avail of tax benefits under section 80D on the premium paid towards the health insurance plan purchased for your parents. Also, the tax benefit can be availed whether or not your parents and children are dependent on you. The benefit that can be availed is dependent upon the insured member’s age. In case the age of none of the insured members is above 60 years, a maximum of Rs 25,000 tax exemption can be availed by the policyholder.
However, if the insured members' age is more than 60 years (senior citizens), the maximum tax exemption that can be availed is Rs 30,000. The tax deduction would add up to Rs 55,000 under section 80D of the Income Tax Act. Additionally, if the age of both parents are more than 60 years old, then you can avail tax deduction of Rs 60,000.
2. Preventive Health Check-Ups: The tax exemption permitted on the amount arising from expenses on preventive health check-ups is Rs 5,000. It means if the total of your premium comes out to be Rs 20,000 in a financial year, then with the help of this provision you can get Rs 25,000 as a tax deduction. Before purchasing a health insurance plan ensure that your network hospitals provide facilities for preventive health check-ups. A yearly health check-up is necessary as it would help you and your family to be prepared in advance against illnesses and to take preventive action earlier. Moreover, tax benefits on preventive health check-ups can be obtained even if the payment is made in cash.
3. Mode of Payment: Payment of premiums towards health insurance made in cash is not allowed for tax exemption. To be eligible for a tax deduction, it is important to make payment of premium in any other mode except cash, it can be net banking, credit card, debit card, cheque, digital channels, etc. However, payment of preventive health check-ups made in cash is eligible for a tax deduction.
4. Add-Ons: Tax benefits under section 80D are not just restricted to deductions on health insurance plans but on super top-ups, disability riders, and critical illness plans. Therefore, the policyholder can not only safeguard themselves from unforeseen medical expenditures but also use these deductions. There are majorly two kinds of health insurance plans- ‘fixed benefit’ and ‘indemnity’ health insurance plans. Tax exemption can be availed on both health insurance plans. Buying a health insurance plan should be done with the primary aim of protecting yourself and your family members and not just to avail tax benefits.
Conclusion
In case you still haven't bought a health insurance plan for yourself and your family, then go ahead and purchase it as soon as possible. Reap excellent tax benefits alongside getting coverage against healthcare-related expenditures.
Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive and should research further or consult an expert in this regard.
