The effects of rising inflation may be visible in various sectors. Along with goods and services, what may also often be hit by the impact, is the healthcare sector. This impact can increase the cost of treatment by a lot. It can cause potential financial burden for you (or anyone else) if you do not have health insurance
. An added incentive for purchasing the policy is the tax benefits.
Tax benefits provide individuals with a valuable opportunity to save on taxes while ensuring financial security and access to quality healthcare. While many people are aware of the basic concept of tax deductions on health plans, there are several lesser-known facts that can enhance understanding and optimize tax savings.
Let’s uncover such facts related to these tax deductions.
Health Insurance Tax Deductions: More To It Than Meets The Eye
Anyone who owns a health plan is aware of the health insurance tax benefit 80d
offers to a policyholder. But there are additional benefits which you can claim as a policyholder, to increase your savings on the premium you pay towards your policy.
Let’s look at some of these benefits:
- Tax Deductions for Premiums Paid for Disabled Family Members
While medical insurance tax deductions typically apply to premiums paid for oneself, spouse, children, and dependent parents, there can be instances where premiums are paid for family members outside of this circle. These payments can also be eligible for deductions. If the said family member is suffering from a disability, deductions can be claimed under Section 80DD of the Indian Income Tax Act. This provision offers deductions for expenses related to the medical treatment, training, and rehabilitation of disabled family members.**
- Tax Deductions for Preventive Health Check-ups
Preventive health check-ups are crucial for early detection of potential health issues. What many people may not realize is that tax deductions can be claimed for expenses incurred during preventive health check-ups. Under Section 80D, individuals can claim deductions for preventive health check-ups. The limit for this deduction is ₹5000. This provision encourages individuals to prioritize preventive healthcare and proactively monitor their well-being.**
- Tax Deductions for Health Insurance Premiums Paid Through Digital Modes
There is a misconception that if the premium is paid in cash, tax deduction can be claimed on it. However, tax deduction is allowed on cash payments only for preventive health check-ups. Tax deduction can be claimed only for the payment made through modes such as online payment, UPI, credit, and debit card. Additionally, payment made using cheques is also eligible for tax deduction.**
- Tax Deductions for Alternative Systems of Medicine
Medical insurance tax deductions are not limited to allopathic treatments. Individuals who seek alternative systems of medicine, such as Ayurveda, Homeopathy, or Unani, can also claim deductions for the premiums paid towards health insurance policies covering these treatments. Deductions can be claimed under Section 80D for premiums paid for health insurance policies that specifically include coverage for alternative systems of medicine.**
Facts To Remember About Tax Deductions
The tax deductions mentioned above help in giving you an idea as a policyholder about where you can save money. But there are some aspects of the policy which are excluded from the list of deductions allowed:
- Premium which you have paid for a policy covering family members such as your siblings or your in-laws. These premium payments are not eligible for tax deductions.
- If the premium payment for a policy was made after the financial year had ended, you cannot claim it in the previous year.
- As mentioned earlier, premium paid in cash is ineligible for tax deduction. Only the payment made through digital modes or cheques is eligible.
- If you are paying the premium for your parent’s policy, but the tax deduction is being claimed by your parents, the health insurance tax benefit does not apply in this situation.
- If the proof of premium payment is missing, tax deduction cannot be claimed.
- If the deduction is being claimed for an amount higher than the limit specified, it is deemed as ineligible.
A medical insurance policy offers more than financial assistance from expenses related to medical emergencies. The added benefit of tax deductions offers individuals like you the opportunity to save on taxes as well. By understanding these facts about tax deductions, you can optimize your tax savings and make the most of available provisions. If you wish to insure yourself and your loved ones with a health plan, use the health insurance premium calculator
as a part of your research process to understand the cost of the policy. It is important to stay updated with the latest tax regulations, consult with tax professionals if needed, and maintain proper documentation to face lesser complications while claiming these deductions.
** Tax benefits are subject to change in prevalent tax laws
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.