The cost of health checkups and treatment is continually rising, so buying a health plan for you and your family has become ever more important. Irrespective of the fact whether you are young or old, buying an insurance policy is necessary for your health. This is because health crises do not come up with an intimation.Thank you for reading this post, don't forget to subscribe!
Apart from being covered for unanticipated and exorbitant medical expenses, the policyholder can claim a tax deduction on health insurance premiums under Section 80D of the Income Tax Act.
H2: Ways to save income tax on health insurance –
Following the provisions of Section 80D of the Income Tax Act, when you file your income tax return, you can get tax deductions on your health insurance premiums in the following ways –
- Tax deduction on health insurance premium: You can avail a tax deduction of up to Rs 25000 on the premium that you pay for your health insurance. The premium could be for yourself, your spouse, and your children.
- Tax deduction on health insurance premiums for parents: You can get an additional tax deduction of Rs 25,000 on the premium that you pay for your dependent parents’ health insurance policy. This amount is applicable if the age of the insured is less than 60 years. So, the total tax deduction you can avail (where your age and that of your parent is below 60) is Rs 50,000.
- Higher tax benefits for senior citizens: Under this Section 80D, the tax relief for senior citizens i.e. those above 60 years is Rs 50,000. So if you are less than 60 and your parents are above 60, then you can get tax relief up to Rs 75,000. If both you and your parents are above 60, then you can avail a tax deduction of up to Rs 1,00,000.
- Tax relief for preventive healthcare checkups: The expenses you make on preventive healthcare checkups annually are also eligible for tax deduction up to an extent of Rs 5000. Note that this available tax deduction of Rs 5000 for preventive healthcare checkups is within the umbrella limits of Rs 25,000/50,000.
- For instance, if you pay a premium of Rs 20,000 every and you incur an expense amounting to Rs. 6500 on preventive health care. Of this Rs 6500, you can get a tax deduction of Rs 5000. The remaining Rs 1500 of the preventive health care check will have to be your out-of-pocket expense.
- Make cash payments: While paying the health insurance premium, ensure that you make the payment through banking modes. The banking modes are cheque, debit card, credit card, etc. Additionally, money transfer facilities like NEFT, UPI, etc. can also be availed. But do not pay through cash, as cash payments are not eligible for claiming a deduction as and when you file your income tax return.
H2: Eligibility to get a tax deduction
Under Section 80D of the Income Tax Act, the following individuals can claim tax deductions against health insurance premium payments –
- An individual who has bought insurance for themselves and their family. The family includes children, themselves, spouses, and parents.
- One who is a member of the Hindu Undivided Family (HUF)
- Tax benefits under Section 80D are available to individuals only. A company or a firm cannot avail them.
H2: Points to keep in mind
Listed below are some factors that you should keep in mind for claiming a tax deduction for health insurance premium pay –
- Do not make the payment in cash as cash payments are not eligible for tax deductions.
- The health insurance premium must be paid from the taxable income accounts to get the tax benefits. You can’t claim a tax deduction if the premium is paid from other accounts.
- You cannot avail tax benefits by paying a premium on behalf of your working children.
- If the premium payment is shared between you and your working children, or between you and your parents, then both parties can avail the tax benefit up to the extent of their payment share.
- If your parents are not covered under any health insurance policy, even then you can avail a tax deduction of up to Rs 50,000 for medical expenses incurred for them. So do not forget to tap into this benefit, without cross-checking if incurred medical expenses are eligible for a tax deduction or not.
- While filing the income tax return, make sure you do not miss out on documenting any investments or contributions made Central government’s health scheme. One can claim tax deductions on such contributions.
When you are well aware of the various provisions of tax deduction outlined in the Income Tax Act, you can claim the deduction and save money. The tax deduction norms and limits related to health insurance depend on age and the insurance policy you choose. If you choose for your family, you get a maximum of Rs 25,000 deductions; if you choose for family and parents, you get Rs 50,000 for deductions. Additionally, the norm is to make payments of premiums other than cash mode to get tax benefits. Follow the norms and enjoy tax benefits.
Disclaimer – The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.