Here’s how you can enjoy tax benefits on your health insurance

Competitive corporate environments, unhealthy eating habits, stressful working hours, and a lack of exercise - this is how a professional’s typical weekday looks like. These factors have resulted in many lifestyle-associated illnesses among the working population. This is why it has now become important for everyone to get health insurance to protect their savings when they fall ill.

Now, we all know that health insurance can truly help protect our hard-earned money during a medical emergency. Yet, the advantages of purchasing health insurance are not just limited to the security of your finances. Health insurance also offers tax benefits on the premium paid for the policy, depending on your coverage and plan. These tax benefits are possible thanks to Section 80D of the Income Tax Act. According to this section, an individual can enjoy a tax deduction for the health insurance premium paid from their total taxable income. This includes the amount paid for buying or renewing medical insurance for yourself and your family.

 

Read on to understand in detail about health insurance tax benefits.

 

●          You can enjoy tax benefits only on health insurance installments that are paid via cheque, net banking, debit card, credit card, demand draft, and so on. You do not qualify for health insurance tax benefits if you make payments in cash.

●           Tax deductions are viable only on the health insurance premium and not on additional charges like processing fees, service charges, GST, and so on.

●           Health insurance tax deductions can apply to family plans that cover yourself, your parents, children, spouse, etc.

●     Health insurance tax exemption can also be claimed on the premium that you pay for additional critical illness cover in your policy.

●       Tax exemption can only be claimed by a tax-payer who pays their own health insurance premiums and not by any a third-party.

●       A taxpayer is eligible for claiming tax deductions on the extra amount that is paid by them to improve their benefits from group health insurance coverage.

Value of deductions for health insurance tax benefits

Let’s understand the value of deductions mentioned under Section 80D.

A person who holds a health insurance family plan that includes themselves, their children, and spouse can enjoy health insurance tax benefits of up to Rs. 25,000. This is valid for individuals aged below 60 years.

If a person pays medical insurance premiums for themselves, their family and their senior parents, they can claim an exemption of up to Rs. 30,000 for their senior parents and Rs. 25,000 for themselves and their family. Including a deduction of up to Rs 5000 for yearly health screening, the total permissible tax deduction reaches Rs 60,000. 

Indeed, health insurance secures your finances as well as lowers your tax liability. So, it would be a good decision to invest in a health insurance policy that protects your funds in these ways. Hope this article has helped you get a fair idea about health insurance tax benefits. Take care and all the best!