Do you know that by purchasing an appropriate health insurance policy, you not only safeguard your finances against alarming medical costs that are bound to burn a hole in your pocket, but you can also save a considerable amount on taxes?
Yes, having a health insurance policy can give you double financial benefits. While taking care of your finances during critical medical emergencies, it also allows you to get an exemption on tax under section 80D of the Income Tax Act. A health insurance policy is one of the safest and the best investment that can also help you to save tax.
Health Insurance Tax Benefits
The premium you pay towards your health insurance policy is covered under Section 80 D of the Income Tax Act. The one thing that you need to remember is that you can avail the tax benefits only if you are the proposer of the policy.
Following are the tax exemption limits as per the budget of 2018:
- You can claim a tax deduction up to INR 25,000 per year for the health insurance premium paid for yourself if your age is less than 60 years.
- If you are a senior citizen, i.e. your age is more than 60 years, then you can claim a tax benefit of up to INR 50,000.
- An additional deduction in tax up to INR 25,000 can be claimed, for the health insurance premium paid for your parents, if your parents are not above 60 years of age. This limit increases to INR 50,000 if your parents are senior citizens.
- The tax exemption limits mentioned above also include the expenses incurred for preventive health checkups, with a maximum cap of INR 5,000.
The tax exemption benefit can be availed by choosing either an individual health insurance plan or a family health insurance that covers you and your family (your spouse, children and parents). The maximum deductions that can be availed are of INR 1 lakh if you buy a health insurance for yourself and your loved ones (i.e. if you and your parents are senior citizens).
Health Insurance and Tax Saving: What are the Exclusions?
There are certain things that are not considered for tax exemption as per the Income Tax Act. You should be aware of these while opting for the policy:
- You cannot claim the payment made in cash towards your treatment, except for the expenses related to the preventive health checkups.
- You cannot avail the benefit on the premium amount paid for the group health insurance plans or the corporate plans offered by various companies for their employees.
- You cannot avail the tax benefit on health insurance premiums paid for your in-laws.
Some other things that you should keep in mind while paying for the health insurance premium are that you should pay the premium amount from your taxable income and that you will need to furnish the proof of payment to avail the tax exemption benefit.
With the rising medical care costs, it is imperative that you opt for the most suitable health insurance policy, for yourself & look into policies such as health insurance for senior citizens for the elderly. While a health insurance plan can save you out of pocket expenses, it can also provide you with the benefit of tax saving.
Visit Bajaj Allianz General Insurance to check the features, coverages and benefits offered by our various health insurance products.
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