Do you know the sense of security and sense of relief you get when you start to pay a premium for health insurance? Well, if you have not felt it, you need to know how it feels to get health insurance that is good for you. Paying a small amount (that is, your premium towards the health insurance) on chosen frequencies – can actually have you safe from the fear of any health-associated hazards and dangers. But, if you knew the tax benefits under the medical insurance premium – isn’t that better?
Medical emergencies always catch us off guard. It is always preferable to be safe than to be sorry when it is medical insurance.
In India, the bulk of the people do not have health insurance and must rely on savings or borrowing in times of medical emergency. The government encourages everyone to have medical insurance and allows tax deductions under Section 80D, making it a must-have in your financial portfolio.
Section 80D of the Income Tax Act
Section 80D – this is a section that allows any individual or HUF to deduct medical insurance premiums that are paid in any given year from the total income. This deduction is also available for additional health insurance and critical illness insurance. The deduction benefit is available not just for purchasing a health insurance plan for yourself but also for buying a policy in order to cover your spouse, dependent children, or parents.
Can You Use this Section?
Individual or HUF taxpayers are the only ones who can deduct medical insurance premiums and medical expenses for older persons. Individual or HUF taxpayers can obtain insurance for:
- For yourself
- Children (who are dependent)
This deduction is not open to any other entity. A company or an enterprise, for example, cannot claim a deduction under this clause. The 80 D maximum limit and other factors are mentioned further on – so just keep reading.
Payments that are Actually Eligible Under Section 80D
Individuals and HUFs can claim Section 80D deductions for the following payments:
- A medical insurance premium is one that is paid in any form other than the form of cash for the self, spouse, children, or dependent parents.
- Contribution to the Central Government’s health program or any other scheme as announced by the government.
- Expenses expended as a result of a preventive health checkup.
- Medical expenses incurred on the health of a senior citizen adult (60 years of age or even older) who are not covered by any health insurance plan.
Preventive Health Check-Ups and Section 80D
In 2013 – 14, the Indian government had implemented a preventative health check – up deduction and was in order to encourage the citizens of our country to be more health-conscious hereafter. The ultimate goal of this preventative health check up is to detect any sickness and mitigate risk factors as early as possible through regular health checks.
Section 80D allows for a Rs 5,000 deduction for costs made for preventive health checkups. This deduction would be limited to Rs 25,000/ Rs 50,000, whichever is greater.
This deduction may be claimed by the individual for himself, his spouse, dependent children, or his parents. Cash payments are accepted for preventive health screenings.
How Much Can Actually Be Claimed?
The Income Tax Act offers deductions for two types of premium payments in order to encourage consumers to choose adequate health insurance coverage: on a policy for themselves and their family and on a policy for their dependent parents. As a result, medical insurance premiums paid under 80D can be reimbursed on both individual and family health policies.
Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) could also claim health insurance income tax deductions for policies acquired in India.
The deduction lowers taxable income. The health insurance tax credit under Section 80D is meant to increase public awareness of the importance of health insurance coverage. Many consumers are unsure whether health insurance is tax deductible or how big the health insurance tax advantage under Section 80D is.
Let’s see how much of an income tax deduction you can get for health insurance:
- The medical deduction limit is determined by the principal policyholder’s age.
- You could also claim an income tax deduction for an individual person or a family floater policy purchased for you/you+family, as well as a separate health insurance policy purchased for dependent parents for which you pay the necessary premiums.
- Hindu Undivided Family can claim a maximum deduction of 25,000 (when the Karta is under 60 years old) and 50,000 (if the Karta is beyond 60 years old) (if the Karta is a senior citizen).
- Non-Resident Indians (NRIs) who purchase health insurance coverage in India for themselves or their parents can claim a maximum deduction of 25,000 (regardless of age).
- The Preventive Health Checkup (PHC) allowance is only available if you do not reach the medi claim deduction restrictions listed above.
- The PHC limit is 5000 for policyholders under 60 years old and 7000 for senior adults.
- The maximum medi claim deduction limit for policyholders under the age of 60 is 25,000.
- The maximum medi claim deduction limit for policyholders over the age of 60 (senior citizens) is 50,000.
The surge in the frequency of numerous lifestyle diseases, combined with rising healthcare costs, has made it critical that you protect your and your family’s health. Aside from leading a healthy lifestyle, purchasing a Health Insurance policy is a good way to start. Health Insurance coverage works as a financial safe haven in the event of a medical emergency.
Health Insurance coverage also helps you save taxes in addition to covering your medical expenditures. The premium for your Medical Insurance policy is deductible under Section 80 D. As a result, if you purchase Health Insurance from a reputable Health Insurance supplier – Along with insuring your medical expenses, you stand to benefit from a slew of tax breaks.
Do you know one of the greatest things you can do when you save, subscribe, or apply? It is to know the tax benefits that come along with it; you actually never really know how much you can save up here and how much that money can actually help you.