Reap Tax Benefits Under Medical Insurance Plans
“A health insurance premium paid for a health policy lets you enjoy tax benefits under Section 80D of the Income Tax Act.”
The taxable amount, most of the time, takes taxpayers by shock.
And you’re no exception.
Sometimes, you might get disappointed with the taxable amount that gets deducted from your income.
Let me be more obvious.
You happened to bear thousands of medical bills the previous month. On the other, a good taxable amount was deducted from your salary the same month.
Isn’t it somewhat disappointing?
Yes, sure!
Therefore, you should be safer than saying sorry.
A medical insurance policy is the best tax-saving tool as well as an option to deal with a medical emergency.
Apart from the insurance cover, health insurance doubles up as a great investment, given that it offers great tax benefits.
So, adding health insurance to your investment portfolio sounds like a wise decision.
Table of Contents
Health Insurance Tax Saving Scheme
Here’s how you can enjoy Tax Savings Scheme under medical insurance plans:
Taxable Income
Deduction under Section 80D of the Income Tax Act is available to an individual or a HUF. The premium paid for the health policy lets you enjoy tax benefits under this Section.
- Tax Benefits for Individuals - According to the Finance Act, 2018, a person can enjoy a tax deduction of up to INR 25,000 a year for the medical insurance premium paid for self, spouse, and dependent children.
- For parents and senior citizens - You can claim an additional amount of Rs. 25,000 for the premium paid for parents. If parents are senior citizens i.e. more than 60 years of age, then the tax-deductible amount is Rs 50,000 (it has been increased in Budget 2018 from Rs 30,000 to 50,000).
- If taxpayers are 60 or Above: If the age of a taxpayer and parents is 60 or above, then the maximum deduction under this section is Rs. 100,000.
Let me explain:
If you’re 62 and your parents are 70. In this case, the maximum deduction you can claim is INR 100,000.
Tax Savings Under Different Types of Insurance Plans
You can avail tax benefits by choosing different types of indemnity-based plans, including:
- Family floater plans and mediclaim
- Critical illness plan
- A daily hospital cash policy
- Health insurance, etc.
Preventive Health Check-Ups
You’re eligible for a benefit of up to Rs. 5,000 with regards to preventive health check-ups with a maximum limit range of Rs. 25,000 or Rs. 30,000.
For example,
Assume that you have paid a premium of Rs. 23,000 for your dependent children and wife’s health insurance policy in the financial year 2017-18. You have also got a health check-up done for yourself and paid Rs. 5,000.
Under Section 80D of the Income Tax Act, you can claim a maximum deduction of Rs. 25,000. Rs 23,000 towards the insurance premium paid and Rs. 2,000 for a health check-up.
This is because in your case, the deduction to preventive health check-ups is restricted to Rs. 2,000. Remember, the overall deduction can’t exceed Rs. 25,000 in such a case.
Moreover, in the case of lifestyle ailments, many hospitals, and medical chains offer preventive health check-up packages. Remember, cash payments can also provide tax savings.
Differently-abled
There is a specific rule for differently-abled people.
- Those with 40% or more disability can claim a tax rebate of up to Rs. 75,000 per year. It depends on the severity of their condition.
- Those with 80% disability can enjoy tax exemption of up to Rs. 1,25,000. Moreover, the individuals who are looking after differently-abled dependents (only in case the dependent in question has not claimed these deductions) can also avail of the benefits of these respective exemptions.
Tax Benefits under 80DDB
Section 80DDB allows you to avail deductions in medical treatment for specific ailments. These include:
- AIDS
- Chronic renal failure
- Thalassemia
- Parkinson’s disease
- Malignant cancers
- Neurological diseases (disability of 40% or more)
- Haemophilia
Under this Section:
- Individuals with below 60 are eligible for a claim of up to Rs. 40,000.
- Those more than 60 years of age can claim up to Rs. 60,000.
- Seniors, more than 80 years of age can benefit, with a limit of up to Rs. 80,000.
- The seniors catering to dependents can also reap these benefits.
Keep in mind that you can’t avail of tax-saving schemes under medical insurance plans if you receive reimbursement for treatment costs from your employer or an insurance company.
However, if your employer reimburses only a partial amount, then you can avail the deduction for the remaining amount.
Conclusion
These are some of the tax benefits on health insurance you can enjoy. Since medical costs are skyrocketing, choosing a health insurance policy seems a wise decision. It’s the benefits of the plans that even our government is encouraging us to buy adequate medical plans and avail of tax deductions under Section 80D.
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