Explained: The tax benefits of health insurance
It is a great thing to set financial goals; however, safeguarding your health should have higher priority. After all, a single medical emergency can tatter away and gulp all the funds that you have accumulated throughout the years. Further, there are a ton of benefits of opting for health insurance plans in India, and a few of them are here as follows:
- A health cover will take care of all the expenses that you incur due to urgent medical needs.
- Further, the insurance companies also have an empanelled network of hospitals wherein you can obtain cashless treatments.
- Most of the insurance companies in India will offer you the services of hassle-free claim process and approval.
However, even though health cover has a number of features associated with it; but people overlook these features and mainly opt because of the tax benefits of health insurance.
What are the tax benefits of opting for a health cover?
The tax benefits for your medical insurance premium that you have paid fall under the section 80D of the Indian income tax act. Further, the tax exemptions for senior citizens paying medical premiums have increased after the financial act 2018 from rupees 30 thousand to 50 thousand rupees. This measure has been undertaken by the government to encourage people to opt for health covers in India. Further, each and every earning member protected by a health cover can opt for deductions under section 80D.
Understanding the deductions under the health cover premium paid is quite a cumbersome task. The reason being; there are a lot of components that affect your deductions. However, to make the whole health cover related income tax benefits easier for you, we have compiled a list of them, and they are here as follows:
- You are eligible for a maximum deduction of up to 25 thousand rupees, if you have a health cover for yourself, spouse and children.
- Further, if your parents, as well as you and your family, are under the age of 60 then you can avail deductions up to 50 thousand rupees from your health insurance premium paid.
- And if your parents are above the age of 60 but you and your family members aren’t; then you can get rupees 75 thousand deducted from the premium amount paid.
- If you, your family as well as your parents are above the age of 60 then you can get rupees 1 lakh deducted.
Now, let us understand these tax benefits by examining a sample study of kisna:
Kisna has purchased health insurance policies for himself, family members and his parents. He is 38 years old and his parents are above the age of 60. For his health cover, he pays a premium amount of rupees 35 thousand; and rupees 40 thousand for his parent’s health coverage. Now, under the income tax act 80D, he is liable to avail a maximum of rupees 25 thousand deductions on his premium paid and rupees 50 thousand on his parents premium amount. Therefore, the total deductions that he can claim on both the health insurance premium amount paid are 65 thousand rupees.