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Can Couples Split Health Insurance Premium for Tax Benefit? Let's Explore

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The cost of quality healthcare is rising every day and you cannot ignore the risk of ailments and accidents. The best way to safeguard yourself against all this is a health insurance policy. It not only protects your savings during medical emergencies, but also gives you the option to get the best treatment available. However, a wider coverage with many benefits can mean a bigger premium on the policy and an individual may not have that budget to pay for it. Therefore, sometimes, their spouses pay a part of it. Now, if both are employed, the common confusion is whether they both can apply for the tax rebate. So, let’s discuss in detail if spouses can split the premium on a family insurance planto claim tax benefit under Section 80D. 

What is the tax deduction limit in different scenarios?

Let’s first understand the tax deduction structure under Section 80D of the Income Tax Act. Under this section, the policy premium that you pay for yourself and your family members can help you reduce your taxable income by a certain amount. However, the amount differs according to who is being covered in the policy. For example, if you pay insurance premiums for yourself, your spouse, and your children, you are eligible to claim a maximum tax deduction of INR 25,000 annually. If you buy a policy for your parents, you save another INR 25,000 if they are below 60 and up to INR 50,000 if they are above 60. If you are yourself a senior citizen, who has bought a plan for his family members including parents, you can save up to a lakh. In addition to that, you can earn a deduction of INR 5,000 that can be availed for the expenses associated with health check-ups for the entire family. In short, the deduction can range from INR 30000 to INR 1,05,000.

Confusion for couples

Now, what you first need to know is, the act allows spouses to split the premium on family insurance plans. This helps both the individuals, who are earning, to reduce their taxable incomes.Plus, they don’t need to pay the entire premium all by themselves. If they further decide to buy a separate health insurance plan, then they can claim additional tax deductions under Section 80D up to the limit permissible. However, there’s a catch. Since splitting the premium is not a common practice and because both the partners will need a tax certificate to get the rebate, they must first check with the insurance provider if the insurer has that provision. Experts also recommend that spouses should pay the premium from different banks for proof purposes.

What is covered under medical expenses?

Whether you split the premium or not, buying a health plan is a must.

• It covers hospitalisation expenses and you can avail the treatment in a cashless manner.

• It also covers costs incurred before and after hospitalisation, for a certain period, called pre and post-hospitalisation period.

• The policy comes with a large network of hospitals, so you find quality healthcare nearby.

• It provides coverage for alternate treatments like AYUSH.

• Other benefits include free medical check-ups, lifetime renewability, reimbursement for ambulance charges, etc.

How to pay the premium?

The premium paid against the policy cannot be in cash. In that case, you will not get any tax rebate. However, only the INR 5000 that you can spend on health check-ups can be paid in cash and you will still get the tax exemption.

Documents required to claim tax benefits

Under Section 80D, all you need is the proof of payment of insurance premium along with the policy document clearly mentioning the name of policyholders.

Conclusion

A health insurance plan, whether individual plan or family insurance plans,has many benefits, and one of them is the tax rebate you get. You can also divide the premium with your spouse and you both can get tax exemption. Amazing, isn’t it? However, it is always good to check with your insurance provider for the terms and conditions of your plan.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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