Health emergencies are unpredictable and knock at your door when you least expect them to. There is a lot of stress and chaos involved in such situations. One cannot think straight as there are different things that need to be taken care of at the same time. However, if you have health insurance
, you need not worry about the financial cost of the treatment.
While people consider medical insurance to be expensive, there are tax benefits that you can enjoy with this policy. Let’s find out more about the tax benefits offered with medical insurance.
What is health insurance?
Health insurance is a type of general insurance which is designed to provide financial assistance with costs related to medical treatment. The sum insured amount of your policy can be used to pay for the different treatment costs. This amount of the sum insured depends on the policy you purchase. The various benefits a health insurance policy provides include room rent, nurse charges, ambulance fees, and daily allowance. Apart from individual medical insurance, you can also opt for family medical insurance, senior citizen medical insurance and critical illness insurance plans. *
The relation between health insurance premiums and Section 80D
Section 80D in the Income Tax Act of 1961 allows you, as a taxpayer and policyholder, to avail deduction of the medical insurance premiums paid. Deductions under this section can be claimed on individual health insurance, health insurance plans for family
, senior citizen plans, and critical illness plans. Moreover, these deductions can be availed not just for you, but also for your family and your parents. It is important to note that the amount of deduction is subject to change in prevalent tax laws.
What are deductions under Section 80D?
The following are the 80D deductions that you can avail of:
- If you, your spouse, and your children are below the age of 60, you can avail of a deduction of up to Rs.25,000 on the premium towards the policy.
- If your parents, below the age of 60, are also covered in the same policy, you can avail of an additional deduction of up to Rs.25,000. This means the maximum deduction for those below the age of 60 is Rs.50,000
- If your parents are above the age of 60, you can avail of a deduction of up to Rs. 50,000 for them, in addition to the deduction of up to Rs.25,000 that you are availing for you and your family. In this case, the maximum deduction is Rs.75,000.
- If either you, your partner, or your children are above the age of 60, the maximum deduction amount you can avail up to Rs.50,000.
- If your parents are also above 60, an additional deduction of up to Rs.50,000 can be availed. Thus, the maximum deduction can be availed up to Rs.1 Lakh.
* Standard T&C Apply
Preventive health check-up deduction
As the name suggests, a preventive health check-up is a type of medical check-up that is done routinely. This is done to detect any ailments that might develop in your body. The check-up allows the doctor to detect and diagnose it at an early stage to avoid any major risks in the future. Under Section 80D, preventive health check-up is also eligible for a tax deduction. A deduction of Rs.5000 is allowed under this section. Do keep in mind that this deduction is included within the above deduction limit that you can avail of on the premium payment.
For example, if the premium of your health insurance is Rs.20,000, you get a tax deduction benefit of Rs.20,000 on the premium payment, with the additional Rs.5000 going towards preventive health check-up deduction. However, if the cost of preventive health check-up exceeds the allotted, you might not get to avail of the deduction. It is crucial to note that the amount of deduction is subject to change in prevalent tax laws. * Standard T&C Apply
What are the exclusions of this section?
The exclusions are as follows:
- Premium paid on policy only for yourself, your partner and children and parents are eligible. Premium paid for other family members is ineligible.
- If you are paying the premium for children who are employed, you cannot avail this deduction
- If you and your family are covered under a group medical insurance, you cannot avail of this deduction
- Premium paid in cash is not eligible for the deduction. However, payment for preventive health check-ups by way of cash is eligible for deduction.
* Standard T&C Apply
These are the deductions that you can avail of under Section 80D of the Income Tax Act. If you wish to know more about these deductions or wish to purchase a policy, such as cashless health insurance
, you can get in touch with your insurer.
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.
*Standard T&C apply