How does one provide financial protection for medical risks? Using life and health covers;two of the leading ways to add a safety layer for you and your family. Health policieshave a more extensive scope providing various facilities. Some of which include cashless treatment, post-hospitalization cover, preventive health check-ups and many more. Each insurance plan has the features that make it stand out from the competition.
When you buy a health insurance plan,you look at these different features that you’ll be able to benefit. But apart from them, health insuranceplans enjoy tax benefits too. Isn’t it a win-win situation where you pay to cover your medical costs and in return, get tax deductions? It certainly is!
The deduction to your health insurance premium is available under Section 80D of the Income Tax Act, 1961. Also, you can claim the deductions for the premiums paid on behalf of your parents, spouse or children.
Let us look at the deductions that one can avail on payment of premiums –
Deduction under the Income Tax Act is available for –
- Premiums paid for securing the health of the individual along with their family.
- Premiums paid for health insurancepolicies for parents.
- Preventive health check-up undergone by the insured, along with family and parents.
Let us understand a few scenarios to summarise these deductions –
Case 1: When you and your parents are below the age of 60 years, you can avail a maximum deduction for the premiums paid up to ₹ 50,000 (₹ 25,000 each, for yourself with family and parents)
Case 2: When you are below 60 years, and your parents are senior citizens, the relaxation in tax is up to ₹ 75,000 (₹ 25,000 for you along with family & ₹ 50,000 for your parents)
Case 3: When the policyholder, as well as your parents, are senior citizen, the maximum amount of deductions you can avail is ₹ 1,00,000 (₹ 50,000 for both, yourself with family and parents)
Please note, the income tax laws classify a person above the age of 60 years to be a senior citizen.
Certain policies provide the facility of a preventive health check-up. Any payments towards these preventive health check-ups are also covered under the deductions under Section 80D. The only catch is that the amount of such preventive health check-up is capped at ₹ 5,000. Moreover, this sub-limit of ₹ 5,000 is included in the above limits as provided.
An illustration will help us further understand the above limits –
Mr Nair, aged 40 years, has a family floater health insurance. The previous year, he availed additional health insurance for senior citizensspecifically to insure the health of his parents, both above the age of 60 years.
He pays a premium of ₹ 32,000 for the family floater plan which covers Mrs Nair and their son along with Mr Nair. For his parents, he pays ₹ 65,000 as the premiums.
In the above example, Mr Nair will be eligible to claim ₹25,000 towards the family floater health insurance and ₹ 50,000 towards the health insurance for senior citizens, as a deduction in his return of income.
Keeping in mind the above tax benefits available for health insurance, select the best plan that provides adequate coverage for all future times.