Health Insurance Policy
Paying taxes and spending money to protect your family from externalities can be challenging. However, when you buy a health insurance policy, you can avail of health insurance tax benefits and safeguard your family from the financial burden of any health emergency and treatment.
Health insurance for families has several benefits, like pre and post-hospitalisation expenses, critical illness coverage, etc. They also help you save some tax as you can claim a deduction for the health insurance policy you buy for yourself and your family. This guide will help you with everything you should know about health insurance tax benefits.
Tax Benefits on Health Insurance
Different deductions are applicable under sections 80C to 80U. You can avail of these deductions while filing taxes, and you must make yourself aware of these deductions.
1. Section 80D
Several premiums can be claimed as a deduction under section 80D. Health insurance premiums of any individual or a Hindu Undivided Family business member can claim a deduction under Section 80D.
Additionally, if you buy a few top-up health plans to serve you during critical illness are also covered under this section. You can avail of these deductions only when buying the policy for yourself and your family. The term ‘family’ when it comes to availing the deduction includes:
- Children (Dependents)
- Parents (Dependents)
- Parent in-laws (Dependents)
Any other family member cannot claim a deduction for the health insurance policy.
2. Payments Eligible for a Deduction
As an insurance holder, you must also be aware of the kind of transactions that will be valid for health insurance tax benefits. Some of these payments or transactions include:
- Health Insurance premium payments to the insurance service providers for self, spouse or other dependants considered as family members as per section 80D. Cash payments are not eligible for tax benefits.
- Any expense incurred during any preventative health
- The cost of medical expenses of a senior citizen (a person above the age of 60) who does not have a health or medical insurance policy.
- Payment made to any government-announced programme or health plan offered by the central government.
3. Deduction Limit under Section 80D
The table below shows the maximum deduction limit an individual can avail of if they buy health insurance for themselves, their spouse and their dependents.
Maximum Limit on Deductions
|Self, Spouse and dependants who are not senior citizens||Self, Spouse, Dependent Children and Senior Citizen Parents||Self, Spouse and Senior Citizen Dependents|
|Medical Insurance Premiums and Preventative Health Check-ups of up to Rs. 5,000 for self, spouse and children||Rs. 25,000||Rs. 25,000||Rs. 50,000|
|Medical Insurance Premiums and Preventative Health Check-ups of up to Rs. 5,000 for parents||Rs. 25,000||Rs. 50,000||Rs. 50,000|
|Medical Expenditure of everyone except parents||N/A||N/A||Covered with Medical Insurance Clause|
|Medical Expenditures for Parents||N/A||Covered with Medical Insurance Clause||Covered with Medical Insurance Clause|
|Total Tax Exemption Limit under 80D||Rs. 50,000||Rs. 75,000||Rs. 1,00,000|
An individual may get a deduction of up to Rs. 25,000 from the taxable income as the amount will be exempt from taxes. If the individual’s parents are above 60 years, an additional deduction of Rs. 50,000 will be applicable. However, the value goes down to Rs. 25,000 if the parents’ age is below 60 years.
In the case of the case, the medical claims can also be claimed as a deduction under Section 80C. The deduction will be Rs.25,000 for members under 60 years old and Rs. 50,000 for those who are 60 years of age or older.
4. Preventative Health Check-Up under Section 80D
Preventative health check-up under Section 80D is another important deduction for healthcare expenses. The inclusion came into force in 2013-14 when the Government passed the deduction as they wanted people to take their health seriously.
Under Section 80D, you can claim a deduction of Rs. 5,000 if you have taken preventative healthcare check-ups.
Benefits of Health Insurance for the Family
There are numerous benefits of health insurance for you and your family. While it provides great tax benefits, it provides other benefits too.
- Covers the pre and post-hospitalisation cost of you and your family in case of any medical emergencies
- Covers critical illness and other pre-existing diseases
- Safeguards you and your family from the financial burden of accidental injuries.
- Covers several other charges like ambulance fees, room charges, etc.
When you buy a health insurance policy, it saves you some tax. While the health insurance tax benefits are numerous, they also safeguard your family against all medical emergencies. Hence, you should buy one that covers you, your spouse and your dependents.