Health Insurance With Tax Benefit
As a salaried professional, you can get tax benefits upto Rs 75,000 under section 80D of the Income Tax Act.
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Facts About Health Insurance Tax Benefits You Should Know About
If you have been working for a few years, this would be well known to you. But there are many other lesser-known tax benefits of health insurance. Not being aware of these could disqualify you for availing tax benefits on your policy, so #ThinkAhead and read on to know what they are.
Premiums paid on critical illness and riders
The premium paid on family floater plans- that typically cover your spouse, children and any dependent parents- qualifies for tax exemption. However, it’s also important to note that any insurance add-ons or ‘riders’ purchased with your existing policy and critical illness cover can also be claimed as part of your overall tax benefit.
Premiums paid for health insurance for parents
If you pay the health insurance premium for your parents’ healthcare policy, you qualify for a tax deduction on that too. However, the amount of the deduction will depend upon your parents’ age.
You can claim a tax exemption of up to Rs. 25,000 per year for parents who are 60 years or below. For those above 60 years, the limit goes up to Rs. 50,000. Therefore, the maximum tax benefit that you can claim on this ground upto Rs. 1,00,000 per annum.
Preventive health check-ups
Regular health check-ups help identify potential health risks before they become an issue. Preventive health check-ups also qualify for tax benefits.
You can claim a tax exemption on preventive health check-ups of up to Rs. 5,000 per year for parents who are 60 years or below. For those above 60 years, the limit goes up to Rs. 7,000. This is on top of the tax exemption on premium that you already pay towards the policy. For example, if your annual premium is Rs. 15,000 and your check-up cost is Rs. 7,000, you can claim a tax deduction for the entire sum of Rs. 22,000.
Under Tata AIG MediCare Health Insurance Policy, your expenses for a preventive health check-up up to 1% of the sum insured, subject to a maximum of Rs 10,000 per policy, are covered. However, this benefit only kicks in after two years of not making a claim on your policy- another reason to stay healthy!
Mode of payment of health insurance premiums
Another reason to go cashless! In order to qualify for tax exemption on the premium paid, you need to use modes of payment such as cheque, bank draft, credit or debit cards. So, if you pay your health insurance premium by cash, you cannot avail any tax benefits on your policy. However, you can pay for your preventive health check-up in cash and still qualify for a tax deduction.
Health insurance on multi-year policies
Since claiming tax deductions is an annual process, you may have assumed that a multi-year health insurance policy does not qualify you for a tax deduction, but it does. The deduction is calculated proportionately over the policy term and a certificate mentioning the amount you’ve already claimed is issued by the insurer.
Health insurance will always be one of the most effective ways to claim tax benefits, but it’s important that you #ThinkAhead and don’t lose sight of the bigger picture. With costs of medical care increasing, your priority needs to be choosing a policy that covers you comprehensively, against all the conditions which you are at risk of.
To know more about how to save on Taxes with your Health Insurance, Check our Comprehensive Guide on Tax Benefits on Health Insurance