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Aug 18, 2022

Lesser-Known Tax Benefits of Medical Insurance Plans

Health insurance in 2022 is a necessity, and it goes without saying that you need to have one to ensure financial protection in times of medical emergencies. Protecting your own and your family’s health becomes a less stressful event as the burden of finances is relieved when you have a Plan B in the form of medical insurance cover. But apart from financial protection, a health insurance policy also offers deductions for your income tax returns. This way, you can enjoy financial shield for medical treatments and tax benefits for any payments made to your insurance company. This article discusses some of the tax benefits that are available in health insurance plans that are not given the credit they deserve. Let’s take a look at them. Section 80D of the Income Tax Act Under section 80D of the Income Tax Act, any premium paid towards medical insurance premiums are allowable as deductions. When planning your finances, this is a crucial step, as a health insurance plan not only provides protection for treatment, but also aids in your financial planning by helping you lower the burden of taxes. Here are some of the lesser-known tax benefits: Health insurance premiums Any premium paid towards a health insurance policy, be it individual policy, family floater plan, critical illness insurance, or any other type of cover, is deductible from your gross taxable amount under Section 80D. For this deduction, different limits are prescribed. Premiums for self, spouse and children are deductible up to ₹25,000 if all of them are below the age of 60. Those above 60 years of age are classified as senior citizens as per the tax laws, and the limit extends up to ₹50,0000. Further, the health insurance premiums paid for parents are deductible from the gross amount of your income within specified limits. For senior citizen parents, the limit extends to ₹50,000 whereas the deduction for the premium paid for parents below 60 years is capped at ₹25,000. * Note: Please note that tax benefit is subject to change in tax laws. Health check-up facility Along with a deduction from any premiums paid, section 80D also allows for a deduction up to ₹5,000 for a health checkup that you might have sought. These health checkups are generally preventive in nature and are sought to identify illnesses. The deduction is not over the above-mentioned limits of your insurance premium, but as a sub-limit within the above admissible deductions. * Note: Please note that tax benefit is subject to change in tax laws. Deduction for indemnity as well as defined benefit plans Health insurance policies are broadly classified in two categories — defined benefit plans where the amount of compensation to be paid is decided at the start and indemnity plans where compensation is paid based on the medical expenses subject to the overall sum insured. Deduction in your tax return is available for both types of insurance plans for the premiums paid to seek coverage. * No deduction for cash payments While the above article details the situations that help to lower your tax calculations, you also must remember that cash payments of insurance premiums do not qualify as a deduction in your income tax return, except for preventive health checkup. * * Standard T&C Apply Note: Please note that tax benefit is subject to change in tax laws. When determining what features to select in your insurance policy, you can make use of a health insurance premium calculator that helps to determine the premiums based on the policy features you have opted for. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.

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