With health as your ultimate wealth, there is no better way of protecting it than with health insurance. And with so many options open to us, selecting a convenient health insurance plan is not a chore anymore! For every premium you pay on your health insurance, you are one step closer to protecting yourself and your family completely, in times of medical emergencies.
And though you may think that health insurance is an expense, it is an effective way to cover your medical expenses financially and also doubles up as a great tax saving instrument!
Let’s find out more about this.
Why is Health Insurance a Viable Tax Instrument?
To pay lower premiums on your health insurance, you do not always have to settle for a cost-effective policy. While that should be a concern, it is a wiser option to know how you can claim deductions on your health insurance premiums while being protected by the benefits of a full-coverage plan.
As per Section 80D of the Income Tax Act, 1961, you can enjoy tax benefits on your health insurance premiums when they are paid for the following members in your family:
- You or your spouse (policyholder)
- Your or your spouse (non-policyholder)
- Dependent In-laws
The taxable income that we pay to the government can, sometimes, be quite an amount. On top of that, paying health insurance premiums can add to this amount. However, in the case of medical expenses, Section 80D of the Income Tax Act enables certain tax deductions on the premiums. The premium of the health insurance plan can be deducted from the taxable income.
The upper limit of this amount is ₹25,000, while for senior citizens it can be extended up to ₹50,000. Hence, if you and your family, as well as your parents, fall under this category, you can avail a deduction of up to ₹75,000 from the taxable income. This deduction amount increases further up to ₹1,00,000 if you, the policyholder as well as your parents are both above the age of 60 years.
How to lower tax with health insurance?
Under Section 80D of the Income Tax Act, as a taxpayer, you can claim the following tax deductions based on the health insurance premiums you pay for yourself or yourself and your family, and your parents.
The same is also applicable for Hindu Undivided Families (HUF), where the deductions can be claimed on the premiums of any family member. The table entails the deduction limits, which also includes the deductions on health check-ups:
|People Covered||Exemption Limit||Exemption on health checkup||Maximum permissible limit|
|You and your family||₹ 25,000||₹ 5,000||₹ 25,000|
|You and your family + Parents (Both below the age of 60 years)||₹ 25,000 + ₹ 25,000||₹ 5,000||₹ 50,000|
|You and your family (below 60 years) + parents (above 60 years)||₹ 25,000 + ₹ 50,000||₹ 5,000||₹ 75,000|
|You and your family + Parents (Both above the age of 60 years)||₹ 50,000 + ₹ 50,000||₹ 7,000||₹ 1,00,000|
While these tax benefits on your health insurance plan are quite beneficial under Section 80D, it is important to note that there are also some exceptions. In an event, where the health insurance premiums are paid in cash, you cannot claim the deductions. Furthermore, you can claim the deductions on the premiums for your children only if they are dependent on you.
It is always recommended that you have a suitable health insurance plan to protect yourself and your loved ones from unforeseen medical contingencies. For comprehensive health coverage – individual plans, family-floater plans and senior citizen plans - choose from Royal Sundaram’s affordable health insurance plans online.