The basic purpose of purchasing a health insurance is to protect your health and get access to quality health care. Most financial experts suggest that your initial step towards any financial plan should start with assurance of having an adequate health insurance cover for one self and family even before starting to save for other financial goals.
However, a health insurance policy also opens a way for enjoying tax benefits. Yes, one good part of health insurance is that you get tax benefits on premiums paid for your health insurance plan. This article is directed to resolve you queries regarding tax deduction on Health Insurance Section 80D.
The Income Tax Act 1961 has regarded health insurance as an important investment and a person having a health insurance policy can enjoy tax benefits under Section 80D of this Act. According to this section, tax benefits are only offered towards policies bought for self, spouse, children and non-senior citizen as well as senior citizen parents provided, the premium is paid in any mode other than cash. There have been cases in past where people paid premium for an existing policy which was actually purchased by their parents few years back. Claiming your tax benefits on such policies tend to be problematic. Therefore, the best way is to either buy a new policy or get in touch with your concerned insurance company and change the proposer at the time of renewal.
The quantum of your tax benefit depends on the age of the person who is medically insured. On the premium paid for self, spouse, children and parents, the maximum deduction that you can avail is Rs25,000 per year, provided that your age of is less than 60 years. If the premium paid by an individual towards health insurance policy for his or her senior citizen parent above 60 years of age, the maximum is capped at Rs30,000. Hence, a taxpayer can maximise tax benefit under such cases.
The tax benefits from section 80D is applicable on the premiums paid towards any health policy and therefore does not restrict you to buy health plan only from a health insurance companies. The premium paid for riders and critical illness within a life insurance policy also qualifies for tax benefit under the section 80D.
Both ‘indemnity’ and ‘defined benefit’ form of health insurance plans are eligible for claiming tax benefits. Not just the indemnity plans like an individual health insurance plan known as Mediclaim or Family Floater qualify for tax benefits but also defined benefit plans such as daily hospital cash plan or a critical illness plan of any standalone health insurance company or a general insurance company would qualify for such tax benefit under section 80D.