All You Need To Know About Health Insurance And Tax Benefits

None of us plan to fall sick or have any medical emergency, but there is a possibility of needing medical care at some point of time in your life. When that happens, your savings might drain out because of the rise in medical expenses these days. Therefore, having a comprehensive health cover is a must to save yourself from any financial crisis during a health emergency. 

There is also a tax advantage associated with health insurance. A tax concession is provided on the premium paid towards a health insurance policy. Premium paid on health insurance is tax-deductible under Section 80 D of the Income Tax Act. The deductions under Section 80 D can be claimed by individuals or a Hindu undivided family. The sum claimed on tax deduction depends on the people insured under your policy- yourself, spouse, children, or parents. 

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You can save up to Rs 25,000 on the premium paid for self, spouse, and children and can save additional Rs 25,000 if your parents are also having health insurance. However, if your parents are above the age of 60 years, you can avail tax exemption of Rs 50,000. So there can be four scenarios depending on the number of people insured in your policy and their age. 

Health insurance for self 

You as an individual or Hindu Undivided Family can claim a deduction up to Rs. 25,000 under Section 80D when buying health insurance for self, spouse and children. For instance, if Rohit’s age is 35, his wife Monica’s age is 34 and their son Aarav’s age is 4 years, the maximum deduction that Rohit can claim for his family’s health insurance is Rs. 25,000.

Health insurance for self and parents (below 60)

If you have a family as well as dependent parents, you can avail an additional deduction of Rs. 25,000 for buying health insurance for your parents. In total, the overall deduction that can be claimed is Rs. 50,000.

For instance, apart from his family, Rohit has dependent parents aged father (59) and mother (57), Rohit can avail an additional benefit of Rs. 25,000 for buying health insurance for parents. The total benefit he can avail becomes Rs. 50,000 i.e. Rs. 25,000 (self) and Rs. 25,000 (parents).

Health Insurance for Self and Parents (Above 60)

If you have dependent parents and age of any of the parents is above 60, you are allowed for a tax benefit of up to Rs. 50,000. Here, the total tax benefit goes to Rs. 75,000. For instance, apart from your family, you have dependent parents aged father (71) and mother (68), you can avail an additional benefit of Rs. 50,000 for buying health insurance for your parents. The total benefit that you can avail is Rs. 75,000 i.e. Rs. 25,000 (self) and Rs. 50,000 (senior citizen parents).

Health Insurance for Self (Above 60) and Parents (60)

Where one family member— self, spouse or children— is over 60 years of age, one can claim up to Rs 50,000 in tax benefit on medical insurance. Additionally, for parents over 60, medical insurance paid can fetch up to Rs 50,000 in tax benefit. So, the total deduction, in this case, can be up to Rs 1 lakh a year.

For instance, your age is 65 and your father’s age is 90. In this case, the maximum deduction you can claim under section 80D is Rs. 1 Lakh i.e. Rs. 50,000 (senior citizen self) and Rs. 50,000 (senior citizen parents).

Deduction on preventive health check-up
Apart from health insurance, any payment made towards preventive health check-up entitles you to a tax deduction of Rs 5,000. This deduction shall fall in the overall limit of Rs 25,000 and can be claim by you, spouse, dependent children or parents. For example, Rohit paid a health insurance premium of Rs 22,000 for the insurance policy he bought for himself, his wife and his dependent kid. Further, he even got a health check-up done for himself and his wife for which he paid Rs 5,000.

Now, Rohit can claim a maximum deduction of Rs 25,000 under Section 80D of the Income Tax Act. While Rs 22,000 has been allowed towards the insurance premium paid, Rs 3,000 has been allowed for a health check-up. The deduction towards preventive health check-up has been restricted to Rs 3,000 as the overall deduction cannot exceed Rs 25,000 in this case. So, seeing the tax benefits associated with health insurance, you must start planning your finances wisely in the beginning of the year to save taxes and as well as protect yourself financially from any uncertainty. 

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