Health insurance undoubtedly provides you with a wide range of benefits starting from coverage for hospitalization expenses to offering coverage for the expenses of an organ donor. But in addition to all the benefits that you can avail with your mediclaim policy, it also offers tax benefits of up to Ã¢âÂ¹25,000 for premiums paid under a family floater plan and Ã¢âÂ¹50,000 for the premium paid against your parents' health cover.
Above all, it is essential to ensure that you have a health insurance policy that provides with good coverage. As a matter of fact, a health insurance policy is something that you need to keep in your portfolio since not only does it offer the much-needed coverage in the event of any medical emergency, it also acts as a tax-saving lane given that it offers income tax exemption under Section 80D of the Income Tax Act.
Under Section 80D of the Income Tax (I-T) Act, every individual or HUF is entitled to claim a tax deduction on their medical insurance policy which is purchased from the total income in a financial year. You may also claim tax benefits if the health cover is bought to cover parent, spouse or dependent children.
Different Types of Tax Benefits That You Can Avail on Health Insurance Policy
- Any individual who pays an annual premium on health insurance for self or spouse/parent or dependent children can claim income tax benefit of up to Ã¢âÂ¹25,000 (for age below 60 years) under section 80D of the Income Tax Act.
- This prescribed tax exemption limit for the benefit is up to Ã¢âÂ¹50,000 given that the individual is a senior citizen and a resident of India.
- The maximum tax deduction that can be availed is Ã¢âÂ¹1 Lakh if both the taxpayer and the parent, for whom the medical covers have been purchased, are aged more than 60 years.
- You can claim a deduction of up to Ã¢âÂ¹25,000 or Ã¢âÂ¹50,000 if the health insurance is for you or spouse and you are above 60 years.
- If you insure your parents, you can avail an additional deduction of Ã¢âÂ¹25,000 or Ã¢âÂ¹50,000 if they are aged above 60 years.
- No such deduction is available in case of parents-in-law. However, a deduction of up to Ã¢âÂ¹5,000 for preventive health check-up is available but this sum is included in the overall cap for the health cover.
Here's How You Can Claim Tax Deductions on Your Health Insurance Policy
- At the time of purchasing a medical insurance policy, the insurance provider shares an 80D certificate or tax certificate which you can submit while filing an income tax return in order to avail tax benefits on your health insurance.
- However, you must keep in mind that the policy premium must not be paid in cash (to claim a deduction in Income Tax Return).
- In addition, for claiming a tax deduction, the receipt of the paid premium along with a copy of the health insurance policy could be required to be submitted.
It is worth mentioning in this context that tax benefits under Section 80D are in addition to Section 80C tax breaks of up to Ã¢âÂ¹1.5 lakh. One may choose to spend the available amount for senior citizens’ deduction on medical expenses. In addition, if you pay the health insurance premium at one go, it allows tax benefits for the number of years you are covered under a health insurance policy.