Tax Benefits In Health Insurance Plans

Health insurance plans are a blessing because they not only cover medical costs but also work well as a tax-saving strategy. Under Section 80D of the Income Tax Act of 1961, policyholders are qualified for a sizable tax deduction on the health insurance premiums paid to purchase health insurance policies. The Income Tax Act provides tax benefits to policyholders, whether they are self-employed or employed on a salary. Policyholders receive the benefit of both health insurance and tax deductions when utilising tax benefits.

Whether health insurance coverage is offered by the proposer, their spouse, their children, or their parents, there are tax advantages. However, when purchasing health insurance for parents, consider coverage options in addition to larger tax benefits.

Exemptions Available Income Tax Under Section 80D

The cost of a health insurance policy's premium is deducted from taxable income under Section 80D of the Income Tax Act. The deductible amount's highest limit is Rs. 25,000; for senior citizens, it can be increased to Rs. 50,000. (with effect from 1 April, 2018). This implies that the policyholder is now qualified to get a deduction from their taxable income of up to Rs. 75,000. 

Which Health Insurance Plan Is The Best? Is the Tax Benefit Different for Different Plans?

There are many various kinds of health insurance plans on the market, but indemnity health insurance, which covers real hospitalisation costs incurred during treatment, is the most popular option. On the other side, fixed-benefit health insurance plans give you a lump sum payment that you can use anyway you like. For instance, upon diagnosis of the critical conditions indicated, critical illness plans give you a lump payment. The good news is that you can take advantage of tax advantages on the premium you paid for either of these plans.

Whether you pay a premium for a benefit-based health insurance plan like daily hospital cash or critical illness insurance, or an indemnity-based health insurance plan like individual health insurance, family health insurance, or senior citizen health insurance,

The tax advantages are the same for everyone. According to Section 80D of the Income Tax Act of 1961, you are eligible for tax benefits. Additionally, by adding riders to your health insurance plan, you can pay an additional premium and still qualify for Section 80D tax benefits.

Important Things To Keep In Mind

The following are some things to keep in mind if you want to be eligible for tax benefits under Section 80D deduction of the Income Tax Act of 1961 for health insurance plans:

• Read the terms and conditions of your health insurance policy's tax exemptions carefully.
• To qualify for tax deductions, avoid paying health insurance payments in cash.
• If you purchase health insurance coverage for yourself, your parents, and your spouse and you are all senior citizens, you may deduct up to Rs. 1 lakh from your income under Section 80D.
• Tax reductions up to Rs. 1.5 lakh under Section 80C can be combined with benefits under Section 80D.

Benefits from Taxes for a Long-Term Health Insurance Policy

People who want to purchase health insurance policies with multiple years of coverage can now take advantage of prorated tax benefits in addition to discounts on premiums. You can take advantage of tax advantages proportionately throughout the years for which multi-year health insurance policies have been obtained. 

The advantage of a multi-year health insurance policy is not simply restricted to those benefits described above; it also includes the fact that the premium for them is constant during the duration of the policy. This suggests that you won't need to worry about premium increases in the future. The premium must be paid in full at once, relieving you of tension for the duration of the policy term.

Conclusion

Overall, there is little question that health insurance policies are among the best methods to save taxes and guard against having your savings squandered on medical bills. They also assist you in lowering your tax liability by enabling you to claim a Section 80D deduction from your taxable income of up to Rs. 1 lakh. In order to ensure a healthy and secure future, it is advised to purchase health insurance as soon as possible.

Also Read: 

All You Need to Know About Health Insurance Premium Calculator

List Of The Major Diseases That Should Be Covered In My Health Plan