Here’s How You Can Save Tax While Protecting Yourself & Loved Ones Using Health Insurance
Focus on health of an individual has gained prominence since the start of a global pandemic. This has suddenly seen health taking precedence on everything else and thus more and more people are looking for alternatives to secure one’s health. Coupled with these troubled times, there is mounting pressure and hectic routines that makes it even more critical to have a Plan B.
Health insurance plans are the perfect way to safeguard your health. Not only it ensures a safety net in for available medical resources, but also a smart way to manage your financial plans. There are different health insurance plans that cater to different needs which range from coverage for newborn right up to senior citizens. While there are various features of health insurance policies, lesser known benefits include tax savings. Surprised? Let’s look at how you can not only have medical coverage, but at the same time be able to save taxes when you buy a health insurance policy.
Section 80D of the Income Tax Act, 1961
The Income Tax Act has laid down section 80D which allows for a deduction for the premiums paid for health insurance cover. Be it health insurance plans for family, individuals or a critical ailment cover, all are allowed a deduction under this section. Health insurance policies where premiums are paid via any mode other than cash are eligible for this deduction. Bank transfers, debit and credit cards, UPI and e-wallets are acceptable modes of payment to avail this deduction. The amount of deduction that can be claimed under this section is classified is two parts based on age groups – deduction for individuals below 60 years and those above it.
The premium paid for individuals below 60 years is eligible for a deduction of ₹ 25,000 whereas for senior citizens is ₹ 50,000. So, where the all beneficiaries of the insurance policy are not senior citizens, this limit of ₹ 25,000 kicks in whereas the enhanced limit is applicable under health insurance for senior citizens. The table below summarises these deduction –
|Scenario||Premium for and the maximum deduction that can be availed||Total deduction under section 80D|
|For policyholder, their spouse, and their dependent children||For parents, whether they are dependent or not|
|All Beneficiaries are not senior citizens||Up to ₹ 25,000||Up to ₹ 25,000||₹ 50,000|
|The policyholder and other family members are below 60 years
Parents are over the age of 60 years
|Up to ₹ 25,000||Up to ₹ 50,000||₹ 75,000|
|Either the policyholder or any other family member has crossed the age of 60
Parents are also above the age of 60 years
|Up to ₹ 50,000||Up to ₹ 50,000||₹ 1,00,000|
Apart from the above deduction, a deduction of ₹ 5,000 is also allowable for preventive health check-up and is available as an internal sub-limit to the above-mentioned deductions.
These are some ways how health insurance plan benefits not only with financial support for medical treatment, but also in form of tax benefits to the insured. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.