Of late, investing in a health insurance plan has become of utmost importance as changing lifestyles, pollution, stress, and other such external factors have come to have a severe impact on the health and wellbeing of people in general. Thus to safeguard the financial expenses of hospitalization, and other medical expenses, a health insurance plan can be of great advantage. A proper health care plan will ensure financial coverage of the medical expenses giving you the liberty to concentrate on the recovery rather than the hospital bills. Besides, many insurance schemes also cover any severe illness costs and provide a cashless benefit where one does not require to make out-of-pocket payments in the network hospitals covered by the insurance. Personal insurance policies can also be additional protection if you are already covered under the employer’s insurance policy, and also gives you the freedom to opt for insurance that suits your requirements better. Along with all these benefits what fits very conveniently to the needs of Indian people is that Health Insurance can bring along tax-saving benefits. Under Section 80D of the Income Tax Act, 1961 the premiums paid for the health care policies are qualified for a tax deduction.
Let’s check out the Tax benefits on health care plans and how much can you claim under section 80D.
The Tax benefits:
Insuring your health can be one of the smartest decisions to make as it will ensure financial certainty during emergencies for yourself or your family. Moreover, apart from the financial assistance, the tax benefits that insurance policies provide are attractive and can help on saving big. The question may thus arise, are insurance policies tax-deductible?
Well yes, the Indian Income-tax Act,1961 under Section 80D allows tax benefits on the paid insurance premium. This suggests that the amount that you paid as a premium for the insurance policy will be deducted from your taxable income thus bringing down the overall tax to be paid. The tax benefits can be obtained from the premium paid for self, spouse, children, and dependent parent. The maximum deduction that one can avail through premium paid for self, spouse, children, and dependent parents could be INR 1,00,000 per year. However, it should be noted that the tax deduction benefits are subject to changes in the Income Tax laws.
How much can you claim through Section 80D?
The tax benefits under Section 80D were imposed to promote and encourage people to decide on insurance policies for themselves and family. Keeping in mind the joint family concept the tax benefits are also available for the family health policies, both Hindu Undivided Family (HUFs) and Non-Resident Indians (NRIs) can also avail of the tax benefits on insurance policies purchased in India. It is, however, observed that most people remain confused about the tax deductibility of the insurance policies and the benefits of 80D.
- The tax deduction limit is based on the age of the primary policyholder of the policy.
- The Health Insurance income tax deduction can be availed on both individual and family health care plans plus the premiums paid for dependable parents.
- The maximum tax deduction limit for Insurers below the age of 60 is INR 25,000.
- The maximum tax deduction limit for Insurers over the age of 60 is INR 50,000.
- The maximum tax deduction for Hindu Undivided Family, if the head of the family is below 60 years is INR 25,000, and if the head of the family is above 60 years then INR 50,000.
- On the other hand, a maximum tax deduction of INR 25,000 is applicable for Non-Resident Indian irrespective of age, when they purchase a health care plan in India for themselves or their parents.
- There is also a Preventive Health Checkup (HUC) allowance for Insurers with a limit of INR 5000 for someone below the age of 60 years and INR 7000 for senior citizens.
What is PHC?
Preventive Health Checkups or PHC help to determine potential health issues or risks through regular checkups that could either become critical with time and this too comes under the health care plan tax benefits. However, it should be noted that the PHC tax benefits are applicable only when the other deductions are not pertinent.
Things to remember:
- To meet the provisions for a tax deduction on the health care plans it is important that the premium is paid through a caseless transaction, which means using cheques, debit or credit cards, and bank draft to make the payment. Paying the premium through cash will not allow you to enjoy the benefits.
- It remains important that the premium of the health plans should be paid within the financial year to avail of the tax deductions.
- The premium should be always paid by the Insurer’s account and not through someone else’s account if the insurer intents to claim the tax deduction.
- The tax deduction limits will be subject to what is specified in Section 80D and can’t be changed.
- Most importantly, it is recommended that the receipt of the paid premium should be available, or else the claim cannot be made.
Final Word:
With these attractive tax benefits lined up, Health Insurance should now become a priority for Indians, firstly for the financial benefits, it brings during hospitalization and of course for the Income-tax deduction. In India, whatever comes as an extra overwhelms us, and these alluring interests are bound to make us think to opt for health care plans for the multiple benefits that come with it.
