We all know that health insurance is immensely helpful in conserving your savings during medical emergencies. But many are still unaware of the multitude of tax benefits they can avail through the payment of their health insurance premium. Whether it’s an individual health policy or family floater policy, the policyholder is eligible for tax deductions on the premium they pay. One essential reason these benefits have been brought in is to increase awareness about health insurance and persuade more people to get their health financially secured.
Read on to find out more about getting tax benefits on your health insurance.
- The tax deductions depend on the age of the insured
Tax deductions for health insurance are filed under Section 80D of the Income Tax Act. According to this section, one can claim a maximum of Rs 25,000 as tax deductions on health insurance premiums paid for self, spouse, and children. If you include your parents in the policy as well, then you can avail of an additional tax deduction of up to Rs 25,000 if they are under 60 years old and Rs 50,000 if they are over 60 years. If the policyholder (or the eldest member of the family), as well as the parents, are both over 60 years old, then the maximum tax deduction benefit rises to Rs 1,00,000.
- You can get tax deductions on preventive health check-ups too
Section 80D also states that if your health insurance policy includes preventive health check-ups, then you can claim a tax deduction on that too. So, for example, you have paid a premium of Rs 15,000 and did a health check-up that cost you Rs 5000, then you are eligible for a tax deduction of Rs 20,000. Do remember that no matter the cost of your health-check-up, your tax deduction (given you are under 60 years old) will not exceed Rs 25,000.
- Always pay by means other than cash to avail of tax benefits
If you want to retain your tax benefits on your health insurance premium, make sure you pay the premium through Internet banking, cheque, draft, or your debit or credit card. Premiums paid through cash are not eligible for tax deductions under Section 80D.
- The tax deductions might not be the same for all health insurance policies
The tax deductions you are eligible for depends on the policy/policies you have chosen. Benefit-based policies where you get a lump sum amount as a claim pay-out, may not always provide you with tax benefits. Premium paid towards personal accident policy, for example, is not eligible for a tax deduction under certain circumstances. You can only claim tax deductions on the premium of your policy against loss of income and not against accidental death or disability that doesn’t result in loss of income. You may also have to establish that you are paying the premium to protect your taxable income.
Though understanding the tax deductions process can be a bit complicated, doing so with adequate research can help you save a lot. Health insurance can not only be of help during times of need but can also act as a strong component of your financial portfolio.
We hope this article has increased your awareness of the tax benefits to be gained from health insurance.