How Does Health Insurance Help You With Tax?
People might often feel that they are paying for health insurance plans which doesn’t provide them any financial benefit unless they require hospitalization due to an accident, or for some treatment. This is not exactly correct because people who are not claiming any benefit from health insurance, directly, are getting tax benefits under the provisions of the Income Tax Act in India.
Under Section 80D of the Income Tax Act, premium paid towards buying health insurance cover for self, spouse, dependent children, and parents qualifies for Income Tax deductions under pre-defined limits. Even Medical expenses also qualify for Tax exemption, but here let us see how an Individual can benefit due to payment of premium towards buying health insurance.
Health Insurance Premium Payment – Income Tax Deductions
The Income Tax Deduction due to Health Insurance can be divided into three sections. These three sections are based on premium paid:
1. For Self and Family
An individual, less than 60 years of age, paying premium for self, spouse and dependent children can avail tax benefit of Rs. 25,000.
2. For Self, Family, and Parents
Additionally, if there are dependent parents, less than 60 years of age, a maximum of Rs. 25,000 paid towards health insurance premium for parents is also eligible for Tax deduction. However, if one or both dependent parents are above the age of 60 years, the limit goes up to Rs. 50,000.
3. For Insured Senior Citizens
In case the premium paying individual is above the age of 60 years with Senior Citizen parents, then the increased limits are Rs. 50,000 each for the individual as well as insured parents.
For better understanding let’s take an example: So, If Mr. Anand is 30 years old, and has dependent parents who are aged less than 60 years – Mr. Anand qualifies for a tax deduction of Rs. 25,000, for paying premium for self, wife and children and Rs. 25,000 for paying premium for dependent parents taking his total tax deductions to Rs. 50,000
If either or both of Mr. Anand’s parents are above 60 years, his total tax deduction is Rs. 25,000 + Rs. 50, 000 = Rs. 75,000
However, if Mr. Anand is above the age of 60, himself, and his parents are senior citizens who can avail health insurance, Mr. Anand can get tax deduction of Rs. 50,000 for his own health insurance premium and Rs. 50,000 for that of his parents, taking his total tax deductions to Rs. 1 Lakh.
As mentioned above, provisions under the Indian Income Tax Act help in availing tax deductions for paying health insurance premiums. Preventive health check-up as well as medical expenses for dependent parents and disabled family members also qualify for rebate. Careful consideration of Mediclaim policy can help individuals avail these benefits. Individuals having coverage through employers as well as availing retail health insurance need to be careful to provide details of both these types of coverage, at the time of Income Tax return filing. Employer provided Mediclaim will already be part of the Tax deduction at source whereas retail Mediclaim premium details need to be added to arrive at the total premium paid towards health insurance coverage for qualifying family members, to avail maximum rebate allowed under section 80 D.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.