Have you availed a health insurance policy? Then, you may be aware that other than offering you financial assistance during a time of emergency, it also offers tax benefits.
Yes, a health insurance policy helps you cover any cost of unexpected medical emergency, and it also offers some key health insurance tax benefits.
While more than 90% of the health insurance policyholders opt for a policy to avail financial coverage, some of them do that for availing tax gains as well.
Yes, Section 80D of the Income Tax Act lets you avail some tax benefits on your health insurance policy.
Thus, if you are one of the policyholders who is looking to make the most of his/her health insurance policy while claiming tax benefits, you need to know some elements.
- Other than the health insurance premium, a policyholder can also claim deduction for preventive check-ups as per the Section 80D. Yes, you can avail a maximum deduction of Rs.5000 for health check-ups within the total limit of Rs.25,000 for self, spouse, and children. For super senior citizens who are more than 80 years old and who are yet to insured, they can enjoy a deduction of up to Rs.30,000 as a part of the medical expenses.
- A policyholder is allowed to buy a health insurance plan for his/her parents and entitled to avail an extra deduction on the paid premium. It assists your parents as well as you, especially if there is a break in the cover that they need and what they currently possess. However, you should note that the maximum contribution for parents can’t exceed Rs.25,000. If your parents are senior citizens, the maximum deduction that you can avail is Rs.30,000 and deductions are also available even for preventive health care check-ups. If you were to avail the health insurance tax benefits for yourself, you need not be dependent on your children. Yes, Section 80D states that a child is eligible to pay for his/her parents’ benefits no matter if they are dependent on not.
- Make it a point to understand that tax benefits are available on check-ups but only for preventive health care concerns. As a result, it is impossible to get tax benefits on check-ups during a treatment’s course. You are expected to save a tax amount of Rs.1500 if you are in the highest tax bracket and spend Rs.5,000 on preventive tests. Thus, the relevancy of the point that prevention is better than cure, especially if tax benefits are available on it is true.
- If you want to avail health insurance tax benefits, you will need to make payments in any other mode other than the cash. For preventive health check-ups, you can make payments even in cash. You should always preserve all receipts to help you apply your claim.
- Another thing worth noticing is that the service charge is levied on premium for health insurance policies. However, the payment is not available for a deduction. Many experts are of the opinion that service tax should also be made eligible for a deduction under the Section 80D.
The Bottom Line
You are now aware of the vital points if you invested in a health insurance plan to avail tax benefits. It would be worth mentioning that one should not buy a cover just to enjoy tax benefits as being under insured is not a good thing. Always opt for a suitable cover to cover your financial needs as tax benefit is just an addition!