Health Insurance Plans Also Help You Save Taxes! Here’s How
Bad health is an increasingly common issue these days. Even people that seemingly live healthy lifestyles often find their health deteriorating day by day due to factors like a hectic routine and fast-paced lifestyle. This means there is a more significant demand for healthcare. This, in turn, means that there is a steep increase in the cost of healthcare. In such a situation, it is essential to have health insurance.
Many people avoid buying health insurance policies because their employer offers them medical coverage. However, the health insurance provided by your employer is not enough to cover the rising healthcare costs because the sum insured is not enough. However, you need to plan to protect your family and yourself from potential health risks. Moreover, buying health insurance has benefits other than health coverage as well.
Investing in medical insurance is an essential step in proper financial planning. This is a crucial investment as it not only saves you and your family from medical expenses but also provides tax benefits. Here is an overview of the tax benefits that health insurance offers:
Health insurance tax benefits as per Section 80D
Under Section 80D of the Income Tax Act, an individual can claim a tax deduction based on the premium that they pay for health insurance. By purchasing a health insurance plan for yourself and your parents, you can save in the following ways:
- The policyholder qualifies themselves for a tax deduction of up to ₹ 25,000 if they buy health insurance for themselves.
- If you are buying health insurance for yourself and your parents above the 60s, the total tax deduction you can claim is up to ₹ 55,000. This is a combination of ₹ 25,000 deduction for self-coverage and ₹ 30,000 for senior citizen health coverage.
- If your parents are less than 60 years of age, the tax deduction will be limited to ₹ 25,000 as they do not fall under the category of senior citizens.
- As per section 80D of the Income Tax Act, preventive health check-ups for yourself and other dependent members like spouse, parents, and children qualify you for the tax deduction limit of ₹ 5,000 per person.
- For those who have purchased a health insurance policy, the maximum tax deduction limit is just ₹ 60,000. In addition, the eligibility to claim a tax deduction for non-residents is ₹ 25,000 for premiums paid for self and other family members’ health insurance. If an NRI buys a health insurance policy for his parents, the tax deduction is ₹ 25,000.
You must note that tax benefits are subject to changes in tax laws.
Tax deduction limit under Section 80D
The tax deduction limits under Section 80D are as follows:
Eligibility for an individual taxpayer is ₹ 25,000.
If the taxpayer is also paying the premiums for the health coverage for their parents, in that case, they will qualify for a deduction of around ₹ 25,000.
When you buy health insurance plans for a family, if the parents are senior citizens above 60 years, the tax deduction limit is ₹ 50,000. If the taxpayer is a senior citizen, then the tax deduction will also be ₹ 50,000. You must note that tax benefits are subject to changes in tax laws. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.