Lifestyles diseases in India are currently on the rise with almost 61% of deaths being attributed to it. Plus, a whopping 23% of people at an increased risk of premature fatality as the cost of treatment is quite high.
With the healthcare sector on a cusp of transformation, there is a need to have a systematic approach to prevent fatalities in a cost effective manner. Remember that a sudden illness involving expending medical treatment can rattle your finance and possibly leave you debt.
That is why investing in health insurance plans that can cover you and your family is absolutely necessary.
Why Should You Invest In Health Insurance?
Other than rising healthcare costs, there are several reasons why purchasing health insurance makes sense.
Let’s dig deeper to understand the various tax exemptions that can be claimed if an individual invests in health insurance plans.
Tax Exemptions on Health Insurance Premiums
1. Limit on Claiming Exemption on Health Premiums Paid:
Just because you’ve opted for a health insurance plan that comes with a hefty premium, do not assume that your entire premium can be offset against income tax payable. Section 80D of the Income Tax Act states that there is a defined limit to the claim.
The age of the insured individual determines his or her tax benefits. That said, the maximum that you can make is up to Rs. 25,000 in a given financial year. However, the insured’s age should not exceed 60 years of age. This category of health insurance is applicable for self, spouse children and also parents.
2. Investing In A Policy For Senior Citizen Parents:
If you have invested in a separate health plan for parents who are senior citizens, you can additionally claim income tax benefits for up to Rs. 30,000 per annum. This can maximise tax benefits where you can integrate two separate health insurance plans and claim exemptions up to Rs. 55,000 per year.
On the other hand, if you as a taxpayer is above 60 years of age with a health insurance policy and also have a separate health plan for your parents, the total exemption that can be claimed is up to Rs. 60,000 annually.
3. Tax Amount That You Can Save:
If the health insurance plan has been purchased for self, spouse and family with a yearly premium of Rs. 25,000, you can seek income tax exemptions at per the following:
This claim is in addition to what you already save under Section 80D.
4. Life Insurance Companies Riders:
To claim income tax benefits on health insurance plans, it is not compulsory to purchase your policy from a health insurance company only. The tax benefit under Section 80D can be claimed for the premium that has been paid towards medical insurance riders or critical illness add-ons as part of life insurance policies too.
Moreover, life insurance companies that also offer health plans can provide the same tax advantage to their customers under the same income tax section.
5. Tax Benefits on All Health Plan Types:
There are generally two types of health insurance policies available - 'indemnity' and 'defined’ plans.
Health insurance plans, more commonly known as Mediclaims and Family Floaters are indemnity policies. On the other hand, daily hospital cash plans and critical illness policies are prime examples of defined benefit policies. These can be offered by a general or a standalone insurance company.
Both types qualify for tax exemptions under Section 80D of the Income Tax Act.
6. Health Check-ups:
You can get a medical check-up worth Rs. 5,000 done when you are paying a premium of Rs. 25,000 or Rs. 30,000. The break-up looks like this:
These preventive health check-up packages are offered by most established hospitals.
7. Paying Health Premiums Via Cash:
The policy holder has the option of paying the health premium though cash. However, the law of the land disallows the claim of any income tax benefits to be passed on to the insured under such circumstances. In order to claim health insurance benefits, you need to make the premium payment via the following methods only:
That said, you can pay for your preventive check medical check-up through cash which will still qualify for Section 80D benefit.
Even though saving tax is a reason to invest in health insurance, the primary reason for doing so would be to ensure that every member of your family has adequate medical protection. The medical treatment costs skyrocketing over the last few years, having a comprehensive health plan help to mitigate unintended expenses.
Tax exemptions is just the cherry on the cake.
Having said that, always keep your requirements in mind before you purchase any health insurance plan. Analyse future costs and plan your premium accordingly. Make your decision by thoroughly researching the policies online and choose and insurance partner that meets your needs and expectations. Read the fine print before signing on the dotted line.
Stay healthy, stay safe!