Get Coverage and Save Tax: Double Delight with Health Insurance

Posted on: Feb 11, 2022 | | Written by:

Get Coverage and Save Tax: Double Delight with Health Insurance

Published on February 18, 2022. EST READ TIME: 3 minutes

Whether you already have health insurance or are planning to take a policy, you probably know why it is helpful. Medical emergencies usually come without warning, and if you are not prepared, you can lose a ton of money while meeting hospital bills and so on. And being prepared means having health insurance. Not only will it shield your savings, but also help you get a tax rebate. Surprised? Well, not many people are aware that health insurance can help you save money in more ways than one. So, here are a few things you should know about health insurance and tax exemptions.

Reasons to buy health insurance

Here are the top reasons to buy a policy.

1. Financial Shield:

When a medical emergency crops up, you need to dig deep into your savings to pay for the treatment, if you don’t have insurance. Yes, it’s true that owing to the progress both medical science and technology have made, many diseases today get diagnosed and cured easily. But this has skyrocketed the expenses too. Having health insurance helps you get rid of that financial stress. It also pays for expenses incurred during the consultation and post-discharge phases.

2. Cashless treatment:

With a health plan, you can avail cashless treatment. It’s of great help especially when you don’t have enough cash or balance in the bank.

3. A big network of hospitals:

Not only can you get quality treatment, but also approach a hospital in the vicinity, thanks to your insurer’s network with healthcare centres.

4. Flexibility:

There are different types of plans available in the market nowadays that can cater specifically to your needs and fit your budget seamlessly as well.

5. Tax benefits:

The premiums you pay towards health insurance get you tax exemption under Section 80D of the Indian Income Tax Act.

How much can you save on tax?

Under 80D section, the health insurancepremium that you pay for yourself and your family members reduces your taxable income. By how much? Well, it can start from INR 25,000 and can go up to INR 1 lakh, dependingon who all are covered in the policy. Here’s a simple formula:

• If you pay premiums for self, your spouse, and your children, you can claim a maximum tax deduction of INR 25,000 annually.

• If you buy a policy for your parents, who are below 60, you save another INR 25,000.

• If they are above 60, you can save up to INR 50,000 additionally.

• If you are yourself a senior citizen and buy a plan for your family members including parents, you can save up to a lakh.

7 things you should know about tax benefits

1. Limit of Claiming Tax Benefit:

You can buy a plan with a huge sum insured by paying a hefty premium, but there is a limit to the tax rebate it can offer you, as explained above. For example, if you annually pay INR 40,000 on a comprehensive family health plan, covering yourself, your spouse, and your kids, the maximum rebate you can get is INR 25,000,given that none of the insured parties are above 60.

2. Medical Check-ups:

Going for preventive health check-ups can help you get an additional tax rebate of up to INR 5,000. It’s a great incentive to monitor your health at least once a year.

3. Amount of Saved Tax:

In addition to deductions of INR 1.5 lakhs under Section 80C and other tax savings sections, 80D is another great option. As said earlier, how much you can save depends on the age of the insured parties.

4. Available on All Types of Health Plan:

The market offers different types of health plans and they all offer tax benefits.

5. Different from life insurance:

While you can buy health insurance policies from life insurers as well, remember that life insurance policies help you save tax under Section 80C while health plans do that under 80D.

6. Mode of payment:

Cash payment is not allowed to claim tax benefits except for the INR 5000 paid for preventive check-ups. Always pay through net banking, cheque, draft, or debit/credit card.

7. Separate Plans for Parents:

Not only should you buy a different plan for parents who are above 60 as their medical needs are different, but also the tax benefits on their health insurance premiums will be different.

Conclusion

Health insurance undoubtedly reduces the stress that comes from unforeseen medical expenses. But the tax benefits are like icing on the cake. So, don’t delay buying a health insurance policy that will help your family stay safe, happy, and healthy. While you can calculate how much you want to spend on the policy, remember that the peace of mind it offers is priceless.

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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