Do I Get Tax Benefits For Buying Health Insurance?

That is why it is advised to invest in a health insurance policy that will serve you the dual benefit of health protection and tax saving. And you can easily check the health insurance premium using a health insurance calculator; online.

Tax deduction is important for the government as the income tax paid by you is the major source of revenue for the government. It is your duty to pay taxes your taxes to the government until you want to pay the fine. But paying taxes is for the greater good as the government utilized this money to benefit the society in return. If you have a health insurance policy and you renew it next year then also your tax benefits will continue.

While the government levies taxes, it also gives you a chance to save taxes on your annual income and health insurance is one way of doing so. Under the purview of the Income Tax Act of 1962, every health insurance policyholder can avail tax-saving benefits under Section 80D of the IT Act. Tax exemption benefits are applicable to health insurance policies purchased for self, family, and even top-up plans. The tax benefits are in addition to the basic tax-exemption limit of Rs. 1.5 lakh.

You can use the health insurance calculator while choosing a health plan to check the premium online and know your tax exemption limit as given below.

• As per the current rules, tax exemption limit for the premium paid for a family health plan including self, spouse, and children is up to Rs. 25,000.
• The premium paid for senior citizen health plans can save tax up to Rs. 1 lakh.
• And a health plan purchase of parents lesser than 60 years can save you a tax of Rs. 50,000.

You just need to mention the name of your policy, the premium amount and select the deduction under Section 80D to avail tax exemption benefits on your health insurance premium.

Who Can Claim Tax Benefits on Health Insurance Premium?

An individual or a HUF can avail tax saving benefits under Section 80D of the Income Tax Act.

However, the tax exemption benefits would vary on the basis of the age of the policyholder, the premium amount and the age of the family members who are insured. The tax slab also varies on the basis of the income tax bracket that you fall into.

Though the tax exemption limit differs for different slabs, there are different tax deductions that are available to reduce the income tax liability. Check out the different types of tax exemption benefits that you can avail on the health insurance premium that you pay every year:

Below are some tax benefits on health insurance premium under the purview of the Income Tax laws:

• Tax Benefits on Single Premium Medical Insurance Plans- As per the recent Income tax laws, the health insurance premium paid for a multi-year plan in the lump sum is eligible for a tax deduction under Section 80D. And the tax-deductible amount will be based on the total premium paid for the policy term. This will be subjected to the limits of Rs. 25,000 or Rs. 50,000 as per the case may be.
• Higher Tax Benefit on Senior Citizen Health Insurance Plans: The premium that you pay on health insurance policy purchased for your parents can be claimed for tax deduction up to Rs. 50,000. Moreover, the tax deduction limit for expensed incurred on specific illnesses of elderly people is up to Rs. 1 lakh.
• Preventive Health Check-ups: Expenses incurred on preventive health check-ups is also eligible for tax benefits. However, most of the taxpayers end up paying it on their own. The tax exemption limit is Rs. 5000. For example, if you have claimed Rs. 23000 for insurance premium then you can avail Rs. 2000 on preventive health check-ups. As the overall deduction cannot be more than Rs. 25,000.
• Tax Saving on Diagnostic Tests and OPD charges- In addition to the l hospitalization expenses, tax exemption benefits are also provided on the out-patient department or OPD consultation charges as well as expenses incurred on diagnostic tests. You can avail tax benefits on cash payments also unlike other medical expenses that require payment either online or through a cheque or internet banking to avail tax exemption benefits.
• Exemption on Rehabilitation of Handicapped Dependent Relative- Not many taxpayers know about it but expenses incurred on medical treatment of a handicapped dependent relative are also eligible for tax deduction. Expenses incurred on nursing, training, and rehabilitation are eligible for the same. The tax exemption limit is Rs. 75,000 if the degree of disability ranges from 40 to 80 percent. If there is more than 80% of disability then you can save tax up to Rs. 1.25 lakh. In the FY 2018-19, the limit has been increased from 50,000 rupees to 75,000 rupees and 1,00,000 rupees has been raised to 1,25,000 rupees. 
  To avail tax deduction you need to furnish the disability certificate from your doctor or hospital.
  As you can see there are different tax-deduction limits as per the age of the insured member and the health insurance premium that you are paying. It serves both tax-saving benefits and compensates for medical expenses as well.

Things to Remember To Avail Tax Exemption Benefits

• Health insurance paid for a Government/IRDA specified health scheme is eligible for a tax deduction
• Premium should not be paid in cash to avail tax benefits
• Premium paid for sister, brother, grandparents, uncle, aunts, or any other relative is not eligible for tax benefits
• Premium paid for non-dependent children more than 25 years is not eligible for tax-exemption
• Group Health Insurance premium is not eligible for a tax deduction
• Senior citizen refers to people above 60 years of age

In a Nutshell 

Taking into consideration the increasing medical costs a health insurance policy is no less than a necessity. But do not just invest in a health insurance plan just to save taxes. However, buy a health insurance policy to avail health cover along with tax-saving benefits. So, when you buy a health plan or if you already have health insurance then make sure that you avail of the above-mentioned tax benefits as well.

Disclaimer : *Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.