Are you aware of these tax benefits of health insurance?

Posted on: Nov 25, 2021 | | Written by:

Are you aware of these tax benefits of health insurance?

Published on November 25, 2021. EST READ TIME: 3 minutes

You work hard to earn your living – so it makes sense if you constantly look for ways to save on tax. Now, most people go for specific investments that offer them tax benefits too. Which is why, medical insurance might not be on your mind when you are trying to save on tax. But the truth is - health Insurance policies not only protect your finances when medical emergencies threaten to eat into your savings, but also help you get tax rebate. Yes, that’s the icing on the cake. Let’s discuss in detail how getting a health plan can help you save some money on taxes while also enjoying peace of mind.

5 lesser-known facts about tax benefits on health insurance

A medical insurance policy not only provides financial protection during medical emergencies, but also offers tax benefits under Section 80 D of the Income Tax Act. Here are some lesser known facts about tax benefits on health insurance:

1. Coverage for parents: If you buy health insurance for your parents, you can avail tax benefits on the premium paid towards the health plan. The amount of benefit depends on the age of the insured member and does not matter whether your parents or children are dependent on you or not. If none of the insured members is above 60 years of age, you can get a tax rebate of max INR 25,000 a year. If you are below 60 years, but both your parents are senior citizens, the tax benefit will amount to INR 55,000 (INR 30,000 for parents and INR 25,000 for self). Similarly, if both you and your parents are above 60, you can avail tax deduction of INR 60,000.

2. Preventive health check-ups:Preventive health check-ups not only help you keep track of your health and take preventive action,but also help you to avail tax benefits on health insurance. You can get a benefit of up to INR 5,000 for preventive health check-ups. Say the premium of your medical insurance is INR 20,000 and you spend INR 5000 for health check-ups.In that case, you can avail tax deduction of INR 25,000.

3. Mode of payment: If you pay the premium of your health insurance by cash, you will not be eligible for tax deduction. To avail tax benefits, the mode of payment needs to be digital, like net banking, credit/debit card, cheque or draft. However, cash payment made for preventive health check-ups is eligible for tax exemption.

4. Add-ons:For add-ons like critical illness plans, super top-ups and disability riders, you need to pay extra premium. But you can also avail tax benefits on these riders. So, apart from getting added protection from unexpected medical expenses, you will also be exempted from tax. Tax benefit can also be availed on both indemnity health insurance plans and fixed benefit health insurance plans.Indemnity plans pay for all hospitalisation expenses, including pre and post hospitalisation, up to the sum insured. In fixed benefit plan, the insurer will pay a lump sum amount to the policyholder irrespective of the actual medical expenses and the policy terminates after the payout is made. These policies are critical illness plans and daily hospital cash allowance.

Conclusion

A medical insurance policyfor yourself and your family is a must to stay protected against unforeseen medical expensesin case of an emergency. Apart from the coverage and other health-related benefits, you can also avail tax benefits under Section 80 D of the Income Tax Act. So, if you still haven’t bought a policy, do it right now!

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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