If you actively engage in tax planning, you probably already know that premium paid towards health insurance either for yourself or for family helps lower your tax burden.
Basically, up to a certain limit, the amount you spend on health insurance gets deducted from your income, thus lowering your tax burden. As such, when it comes to tax planning, it’s advisable to get health insurance for yourself, for your family, and for your parents.
However, what most people don’t know is that getting a health insurance also offers financial aid in case of emergencies and provides various other financial benefits. In this article, we’ll list out all the other tax benefits you can get from health insurance
. Health Insurance for Parents and Family
Under Section 80D of the Income Tax Act, any premium that you pay towards health insurance policies for your kids, family, or parents, gets counted as a deduction. You can avail of this deduction regardless of whether your parents or your children are dependent on you.
However, there is a cap on the amount of deductions you can avail of. The upper limits of the tax benefit depends on the age of the individual who is insured. If the individual is under 60 years of age, the maximum deduction they can avail of is Rs. 25,000 per year. However, if the insurance is geared towards one’s parents who are above the age of 60, then the deduction gets capped off at Rs. 30,000.
As such, if a taxpayer has taken up health insurance for themselves and for their parents who are over 60 years of age, then they can avail of a maximum tax benefit of Rs. 55,000. However, if the taxpayer is also above the age of 60, then the maximum tax benefit comes up to a value of Rs. 60,000. Inclusive of Life Insurance Policies
This tax benefit doesn’t only relate to health insurance policies. Even if you’re paying a premium on a life insurance policy that provides coverage for critical illnesses, that would also qualify similarly for tax benefits and deductions. Benefits on Health Check-Ups
Under Section 80D, if you pay a premium of Rs. 20,000, and avail of a health check-up of Rs. 5,000, you’ll be eligible for a tax deduction of up to Rs. 25,000. Most hospitals offer health check-up packages with their health insurance.
Furthermore, both “indemnity” and “defined benefit” types of health insurance are eligible for tax deductions. As such, even hospital cash plans and critical illness plans qualify for tax benefits. Payment shouldn’t be made in Cash
Technically speaking, you can make the payment in cash. However, if you want to avail the tax benefit, then you should make the payment from a traceable source such as through internet banking, credit/debit card, cheque, etc. However, if you’re getting a health check-up you can pay for that in cash.
These are a few tips on how to save tax with health insurance. I hope this helps you maximize your benefits.