Having a Health Insurance Plan not only helps you stay protected from unannounced medical emergencies but also helps you to save on taxes. Yes, you heard it right. You can now save your taxes simply by having a Health Insurance policy. To explore more about Health Insurance Tax Benefits, continue reading
In order to encourage the citizens of India to have a Medical Insurance policy, the Income Tax Department allows an individual to avail the Tax Deduction towards premium payment of health insurance policies for self and family under Section 80D of the Income Tax Act.
This deduction can be availed regardless of the fact whether your parents or your children are dependent on you or not. Under this act, one can claim an additional tax-saving benefit of upto Rs. 50,000 if they pay the premium for health coverage availed by any of their parents.
Let us understand How Tax Deductions work with the help of an example:
Suppose, you have a family of five members, you (38 years), your wife (35 years), one kid (8 years), your father (68 years) & your mother (60 years). You & your family are covered under a family floater Health Insurance, where you pay the annual premium of Rs. 30,000. Above this, you pay 18,000 annually for preventive health check-ups. Thus, the final amount paid by you would be equal to Rs. 48,000.
Hence, in this case you are eligible for the Health Insurance Tax Benefit under 80D of up to Rs. 35,000 (Rs.30,000 + Rs. 5,000) annually.
Individuals who spend on medical treatments of specified illnesses or diseases are eligible to claim Tax Deduction under Section 80DDB.
Under Section 80DDB, your Health Insurance Policy provides Tax Deductions up to Rs. 40,000. In case the Insured is diagnosed with a Critical Illness, there is a provision of Tax Deduction upto Rs. 80,000. To avail Deduction under Section 80DBB, it is mandatory for the policyholder to attach a certificate issued by the doctor while filing an Income Tax return.
Under Section 80DD, you will be able to avail a Deduction up to Rs. 75,000 if you are taking care of the treatment expenses of a dependent with disability. One can claim the Tax Deduction against the expenses incurred on the medical treatment, training rehabilitation, nursing, and maintenance of the dependent with disability.
A caretaker can avail a Tax Deduction up to Rs. 1.25 lakh for severe disability.
Those policyholders who are suffering from any sort of physical or mental disability are eligible for a Tax Deduction of Rs. 75,000 under Section 80U. People can avail Health Insurance Tax Benefits under section 80U who are suffering from at least 40% disability.
The quantum of Tax Benefits depends on the age of the Insured. Read the following points to understand the limitations of Health Insurance Income Tax Deductions:
Health Insurance is a must in your investment portfolio if you are looking forward to planning your finances. The government encourages everyone to buy Medical Insurance and allows them to avail Tax Deductions on it under different Sections. Having health Insurance is a must in your investment portfolio if you are looking forward to planning your finances. The government encourages everyone to avail Health Insurance Tax Benefits under different above mentioned Sections.