Tax Benefits On Health Insurances Policies

A health insurance policy is a type of product that covers the medical expenses of an individual due to an illness & these expenses can be related to the cost of medicines, treatment, or hospitalization. Health insurance is a primary investment to get the medical security of expenses for an individual or family. Health insurance provides two benefits in one investment medical expenses and tax benefits.

Health insurances are not only limited to supporting medical emergencies but to provide tax benefits also. Many people purchase health insurance to get tax benefits. Additionally, these benefits can be availed for your spouse, children, or dependent including you.

In this article, we’ll discuss the tax benefits of health insurance, its importance, and how to avail of them including required documents, etc. So take your cup of tea & Read On…

Tax Benefits Under Section 80D

Section 80D provides significant tax benefits for health insurance policies taken for self, spouse, children, and parents. It also encourages individuals to take preventive measures by allowing deductions for expenses incurred towards preventive health check-ups. It is important to understand the eligibility criteria and the maximum limit for tax benefits to take full advantage of this provision.

What is Section 80D?

Section 80d of the income tax act 1961, provides tax deductions on health insurance. Any individual or HUF can avail of the tax deduction for premiums paid towards health insurance in a given year under section 80d. The benefits of deductions are not only unrestricted on health insurance for self but individual’s spouse, children, or family. A taxpayer can be escaped from paying hefty bills on medical situations under section 80d.

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Eligibility Criteria For Tax Benefits

To be eligible for tax benefits under Section 80D, you must be a resident individual or a Hindu Undivided Family (HUF). The policy must be taken for self, spouse, children, and parents. It is important to note that the tax benefits are only available for policies that are not reimbursed by the employer.

The maximum limit for tax benefits:

The maximum limit for tax benefits under Section 80D depends on the age of the insured individual and the policy taken. For individuals below the age of 60 years, the maximum deduction allowed is up to Rs. 25,000. For senior citizens (above 60 years), the maximum deduction allowed is up to Rs. 50,000. If the policy is taken for senior citizen parents, an additional deduction of up to Rs. 50,000 is allowed.

Tax benefits for self, spouse, children, and parents:

Under Section 80D, individuals can claim tax benefits for health insurance policies taken for themselves, their spouse, children, and parents. The tax benefits are available for policies taken for dependent children, whether they are minors or adults. It is important to note that if the policy is taken for parents, they must be dependent on the individual.

Tax benefits for preventive health check-ups:

Apart from the tax benefits on the premium paid, Section 80D also allows individuals to claim a deduction on the expenses incurred towards preventive health check-ups. The maximum deduction allowed for preventive health check-ups is up to Rs. 5,000 per year.

Importance of Health Insurances Policies

Health insurance policies is essential for individuals and their families to cover medical emergencies. The following are the reasons for getting a health insurance policy.

Financial Protection

This is a major benefit of availing of a health insurance policy. There can be any time when a sudden medical emergency may occur and you might not be prepared financially for this. Right? Here come health insurance policies that provide you financial protection against unpredictable medical emergencies. They help individuals and families pay for medical expenses without depleting their savings or going into debt.

Tax Benefits

Another benefit is tax benefits that many people do not know about yet. Health insurance policies offer tax benefits (including all the medical expenses support) under Section 80D of the Income Tax Act, 1961. This allows individuals to claim a tax deduction on the premium paid towards their health insurance policies.

Access To Best Medical Treatments

You can now get access to your preferred medical treatment without thinking twice about the costs of medical check-ups, tests & treatment. No more need to worry about the cost of healthcare treatment in medical emergencies if you already have a health insurance policy, you can now choose a wide range of medical facilities that are enlisted under the insurance provider.

Preventive Healthcare

Many health insurance policies offer preventive healthcare benefits such as annual health check-ups, diagnostic tests, and vaccinations. These benefits help individuals stay healthy and detect potential health problems early on.

As of now, we get to know what is health insurance policies are including their importance. Now let’s understand the tax benefits we get on health insurance.

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Tax Benefit On Health Insurance For Senior Citizens

Senior citizen health insurance premiums is often on the higher side. Also, insurance firms could be reluctant to offer medical insurance to senior citizens  or people with pre-existing conditions. However, the government came up with a budget in 2018 including some relief for senior citizens (With high medical expenses) who are not capable to buy health insurance policies due to pre-existing ailments or can not afford high premiums. This budget 2018 has brought some changes in section 80D such as “deduction for medical expenses incurred on senior citizens”.

Deduction Under Section 80D

The Health insurance premium provides several tax benefits on health insurance under Section 80D of the IT Act. These deductions are given as follows-

Required Documents To Claim Tax Benefits Under Section 80D?

Following are the essential documents to be furnished while claiming the amount of the deduction under section 80C according to the policy. Following are some documents as proof to allow the deduction:

• The payment receipt for the premium.
• The date on the receipt should fall within the financial year for which the tax is computed.
• The receipt should showcase the date clearly on which the premium was received, the amount, as well as the payment mode.
• Cash receipts for the premium payment will not be allowed.
• Temporary receipts issued by agents cannot be used to claim a tax deduction.

Important Points To Remember While Availing Tax Benefits Under Section 80D

• Investments made towards health insurance policies must emerge according to the schemes which the Central Government of India defines. The (IRDA) Insurance Regulatory and Development Authority verifies and approves these schemes and policies.
• Read all the terms & conditions related to the tax exemptions carefully while selecting a health insurance policy.
• To avail of the deductions, the premium for health insurance must be completed via any mode of payment besides cash payments.
• To avail of tax benefits and deductions, Individuals can not use premium payments for siblings, grandparents, aunts, uncles, etc.
• Avoid Payments of premium in Cash.
• Moreover, the deduction under section 80d does not hold for paying premiums for dependent children.
• If you have yielded the premium for health insurance that your parent uses, both individuals can claim a deduction, mentioning the share of the premium.

FAQs

What are the tax benefits on health insurance?

Tax benefits on health insurance refer to the tax deductions and exemptions that individuals can avail of on the premiums paid for their health insurance policies.

What is the prescribed limit for section 80D?

A taxpayer can avail of the deduction of up to Rs. 5,000 for a preventive check-up under section-80d of the income tax act. There are various types of deductions such as Rs.25,000, and Rs. 30,000 to 75,000 depending on the criteria and situations.

How can I claim tax benefits on health insurance?

You can claim tax benefits on health insurance by mentioning the premium amount paid for health insurance policies while filing your income tax returns. You can claim deductions under Section 80D of the Income Tax Act.

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