Tax Benefits Of Health Insurance
Buying health insurance can help you save on taxes on health insurance premiums too. Buying a health insurance plan, on one hand, ensures a health cover to the insured in case of any medical treatment, planned or sudden, if any while on the other it avails you taxation benefits. Investing in health insurance as an essential measure of tax planning not only ensures that you and your loved ones can access necessary medical treatment at your choice of hospital without spending too much on hospital bills but also avail income tax exemption under Section 80D of the Income Tax Act.
Health insurance policies are bought to offset the rising medical costs each year. The expenses of hospitalisation and subsequent treatment may be more in the case of senior citizens who are more prone to old-age problems or recurring disorders. This explains why most people prefer the family floater health insurance that covers all in the family and takes care of their medical expenses in lieu of nominal premium charges. There are others who buy individual plans for themselves and separate senior citizen health insurance policies depending on their needs and budget.
The current norms state:
- A policyholder, be it an individual or belonging to a Hindu Undivided Family (HUF), can avail a deduction not exceeding ₹25,000 on premiums paid on behalf of self, spouse, dependent parents and children under Section 80D of the Income Tax Act.
- Policyholders who have bought additional health insurance policies for their parents aged above 60 years can claim an additional amount of deduction limited to ₹50,000 for each parent. However, the additional amount of deduction can be claimed subject to the condition that the parents covered under the policy are senior citizens. This means that the maximum amount of deduction policyholders can claim for health insurance plans bought for parents is equal to ₹100,000 (₹ 50,000 for father + ₹50,000 for mother).
- Many health insurance companies are reluctant to sell health insurance plans to senior citizens owing to the increased quantum of health risk that they suffer from. This refrains senior citizens to buy health insurance plans for themselves. However, policyholders whose senior citizen parents are not eligible to secure a health cover for themselves can claim deduction up to ₹50,000 towards payment of their medical bills during the year;
It is important to note that policyholders can claim tax deductions on health insurance premiums provided that the premiums have been paid in any mode other than cash. This means policyholders who pay their health insurance premiums in cash cannot claim tax benefits allowed under the Income Tax Act.