Know all about tax benefits on health insurance policies
Most financial experts believe that the first step towards building a sound future should be to ensure that one has a sufficient health cover. As it is said that the health is wealth, it is imperative to look at the health of the self and the family because only a healthy 'you' can accomplish other dreams in life.
You might have got the intimation from your company to submit investment proofs to claim a tax deduction.In this situation, it becomes even more important to get a health insurance for self and family, which is also eligible for tax benefits.
Here are some crucial things that you can know about tax benefits on health insurance policies as per the Income Tax Act.
Health insurance for self, parents, and family: Premiums paid towards health insurance policies for self, parents, spouse, and kids are eligible for tax deduction under Section 80D of the Income Tax Act. Most importantly, it doesn't matter whether children and parents are dependent on you or not.Further, the quantum of tax deduction depends on the age of the insured.
Even top-up and super top-up policies, which offer additional health insurance coverage when the deductible of the main insurance policy is crossed, offer tax benefits under the same act.
The table below will help you to understand various scenarios
|Scenarios||Self, Spouse & Children||Parents (whether dependent or not)||Total deduction under Section 80D|
|No one in the family is above the age of 60||Rs 25,000||Rs 25,000||Rs 50,000|
|Except parents, everyone is below the age of 60||Rs 25,000||Rs 30,000||Rs 55,000|
|All members of the family are above 60 years of age||Rs 30,000||Rs 30,000||Rs 60,000|
Moreover, the indemnity policy, popularly called media claim and family floater, is not the only one with tax benefits.Defined benefit plans like daily hospital cash plan and critical illness plan from a standalone health insurance company and general insurance companies get tax deductions.
Some of the diseases covered under this act are cancer, thalassemia, neurological diseases with 40% or more disability, hemophilia, Parkinson, chronic renal failure, etc. Earlier, the assessee was required to submit the medical certificate obtained from a specialist doctor working in a government hospital. However, the government has recently made amendments which say that even a certificate issued by a private doctor would be valid.
Note, if you get reimbursed for the treatment from your insurer or employer, you are not eligible to get tax deductions under Section 80DDB. However, if you get partial reimbursement from your employer, you can claim a deduction for the remaining amount.
An Illustrative Example to Understand
An individual pays the medical insurance premium as follows:
In the above example, the individual would get a deduction of Rs 40,000 (15,000+25,000) in case the parents are below 60years of age. However, if any of his or her parents is a senior citizen, the tax deduction would be Rs45,000 (15,000+30,000).
Health insurance is an important insurance policy that you should include in your insurance portfolio. However, don't buy health insurance just to save tax. Treat the tax as a bonus only.
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