Everyone knows “what is health insurance.” It is an investment to protect yourself and your loved ones from medical emergencies.” But insurance offers more than financial support against medical expenses; they provide tax benefits also. All that is fine, but how does it work, and how do you know your total deduction? This blog will discuss all your questions in detail!
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What do you mean by Section 80D?
Section 80D of Income Tax Act of 1961 allows every HUF or individual to get a deduction in insurance premiums. You can also avail them of definite plans like top-up and critical illness plans. Further, not only feasible in individual health plans, but you can also deduct the specified amount from a family health plan that covers your parent, spouse, or children.
Suppose Daniel is 45 years, and his father turned 75 recently. Daniel pays an insurance premium of Rs. 30,000 and Rs. 35,000 to take medical cover for himself and his father, respectively. Now, this insurance will undoubtedly help him pay treatment expenses. Unknown to many, they also offer tax benefits! It means Daniel can avail of Rs. 25,000 for his policy and Rs. 35,000 on his father’s, making a total of Rs. 60,000.
Who can Get a Deduction Under Section 80D?
The Income Tax Act permits tax benefits on health policies to encourage individuals to opt for sufficient medical coverage. And If you can claim tax benefits on two types of premium insurance: a policy that covers you and your family or a plan that insures your dependent parents.
The Act enables individuals and HUF who come under taxpayers to take advantage of health insurance tax benefits. The following members are eligible for deduction:
- Self (Yourself)
- Spouse
- Dependent Children
- Parents.
The act also allows NRIs (Non-Resident Indians) to benefit from medical insurance. However, no company or firm other than the listed individuals can take health insurance tax benefits per Section 80D.
Which Payments Are Eligible For Deduction In Section 80D?
Individuals and Hind Undivided Family(HUF) can get tax deductions under Section 80D for the following charges:
- When you pay the insurance premiums for yourself, your spouse, children, and parents in any other mode than cash.
- The mediclaim insurance tax deduction limit depends on the age of the primary policyholder of the insurance plan.
- The government also introduced preventive health check-up deductions in 2013-14 to encourage health awareness. These check-ups aim to identify diseases or ailments and mitigate their risk factors through regular treatment at an early stage.
- The preventive health check-up limit is Rs. 5,000 and Rs. 7,000 for policyholders below 60 and senior citizens, respectively.
- The expense you incur for parents above 60 years who are not a part of the insurance
- When you have contributed to any Central Government health scheme, government-notified or released schemes.
You can save up to Rs. 25,000 yearly. However, the deductible amount goes to Rs. 50,000, in case you have parents above the age of 60 years.
Although health insurance tax benefits are available and can be claimed, you must consider some points when buying healthcare insurance to avail of them. You must note that insurance premiums paid for siblings, grandparents, or other relatives, are not subject to section 80D. Similarly, you can claim tax deductions on add-ons and riders as a part of your overall health policy tax benefit.
Niva Bupa Health Insurance is among the best health insurance company in India. It offers excellent policies for individuals and families that can provide you with the best insurance plans for tax benefits. You can consult with them to purchase a plan that accurately fits your budget and requirements.
Apart from that if you want to know about “Top reasons why you need the best health insurance in India” then please visit our “Health” Category.
