What are the Tax Benefits Available With Health Insurance Plans?
Rising healthcare costs are a matter of concern and the role of health insurance is to provide financial cushioning against the same. Generally, most health insurance policies offer fiscal assistance to a policyholder if they are diagnosed with any critical illness or accidental disability, require surgery, hospitalization, or any other kind of medical intervention. The health insurance cover is then paid to the policyholder either as a reimbursement of all the expenses incurred by or transferred directly to hospitals or medical practitioners known as a cashless benefit treatment.
Basic health care policies come into force after 24 hours of hospitalization but nowadays many daycare medical services are also covered by it. Pre and post-hospitalization charges, consultation charges, treatment costs, and other medical expenses are all reimbursed by health insurance companies, subject to their different terms and conditions. To incentivize health insurance and its benefits, there is a tax concession offered on the payment of health insurance premiums under Section 80D deduction of the Income Tax Act and the Financial Act of 2018. Let us now look at the advantages of tax benefits that can be claimed by a policyholder with health insurance plans -
1. Tax Deduction Against Premium Payment
Section 80D of the Income Tax Act allows health insurance policyholders to claim a tax deduction against the payment of their health insurance premiums. Under this option, a tax deduction is provided for health insurance policies on the policyholder themselves, their spouse, or children. This tax-saving option is available only when the premium payment is via any means other than cash.
2. Deductions For Senior Citizens
The Financial Act of 2018 allows for greater tax benefits for premiums paid to senior citizens. In case one of the policyholder’s parents is over the age of 60, then they can claim a tax benefit of INR 60,000. Additionally, they can also claim a benefit amount of INR 25,000 for the premium payments made towards health insurance policies covering themselves, their spouse, and their children. Hence, they can claim a total tax benefit of INR 75,000.
3. Tax Benefit For The Eldest Family Member
Tax benefits can also be availed against the premium paid for the health insurance policy of the eldest member of the family. If the age of the eldest member of the policy covered by a health insurance policy is above 60 years, the policyholder can file a tax benefit amount of INR 50,000. For premium payments towards policies that cover the parents of the policyholder, if they are above the age of 60, then they can avail a tax benefit amount of INR 50, 000. Hence, under these circumstances, the total tax benefit that they can claim in a year is INR 1 Lakh.
4. Tax Benefit For Family Members
Not being a senior citizen also allows for the utilization of tax return benefits with health insurance plans. For example, if no one in your family holding a health insurance policy is over the age of 60 years, you are entitled to a tax benefit of INR 25,000 in a year.
5. Added Rewards
Tax benefits against health insurance policies come with an added reward where you can use the tax benefits received for your parents over the age of 60 to pay off your medical expenses. Moreover, if you pay the health insurance premium at once, you are also entitled to tax benefits for the entire term of the policy tenure.
These are the different kinds of tax benefits that you can avail against the premium payment of health insurance policies. However, you need to be aware of the fact that all the tax benefits under the 80D Income Tax Act are in addition to the 80C tax break up for INR 1,50,000. Hopefully, these insights will be of use to you when you are buying a health insurance policy and looking for tax benefits at the same time.
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.
