Health insurance policies have become the need of the hour. With soaring medical inflation, it can be financially draining to fund a medical emergency from your hard-earned savings. That’s where a health insurance plan comes to the rescue, eliminating any financial worries for medical treatments. These health covers are not just handy for an emergency situation, but also in cases of planned medical treatments. Further, instead of paying the entire medical bill, it is affordable to pay a small sum periodically to ensure financial coverage for treatment.
But apart from the financial benefits of health insurance plans, they also provide tax benefits under Section 80D of the Income Tax Act. Thus, premiums paid for insurance plans can be availed as a deduction on your return of income. This benefit is not limited to any specific type of health insurance policy, but for all types. Whether they are individual plans, family floater policies, critical illness plans, senior citizen plans, top-up covers or any other type, the tax benefits can be availed for all.
Tax benefits for premium paid for your parents
When health insurance premiums are paid for parents, whether dependent or not, the Income Tax Act allows a deduction of the premium under Section 80D. This amount of deduction is decided based on the age of the beneficiary. If the insured individual is over the age of 60, that person is classified as a senior citizen and the deduction amount is up to ₹50,000. The same is capped at ₹25,000 if the person is below 60 years. Remember tax benefit is subject to change in tax laws.
Tax benefits for premium paid for self, spouse, and children
A deduction is allowed under Section 80D of the Income Tax Act when you pay health insurance premiums for yourself, your spouse, or your children. Again, the capping on the amount of deduction is based on the age of the beneficiary. For instance, if all beneficiaries are not senior citizens, the deduction can be availed up to ₹25,000. The same deduction caps at ₹50,000 if above 60 years.
The table below summarizes the deduction amount and the maximum deduction that you can avail:
|Health insurance policy for||Deduction for self, spouse, and children||Deduction for parents||Maximum Deduction|
|Self, spouse, and children (everyone below 60 years)||₹ 25,0000||–||₹ 25,0000|
|Self, spouse, children, and parents, all of whom are below 60 years||₹ 25,0000||₹ 25,0000||₹ 50,0000|
|Self, spouse, children below 60 years and parents classified as senior citizens||₹ 25,0000||₹ 50,0000||₹ 75,0000|
|Self, spouse and children and parents, all classified as senior citizens||₹ 50,0000||₹ 50,0000||₹ 1,00,0000|
Apart from the above deductions, an internal sublimit of ₹5,000 is available for health check-up facilities. Note that tax benefits are subject to changes in tax laws.
How to claim tax benefits for premium paid for your health insurance cover?
It is a straightforward process to claim the deduction of any premium paid on your income tax return. You need to have a payment receipt for the premium paid. When filing your income tax return, under section 80D, you need to enter the details of such premiums paid for yourself, your spouse, children, and parents. Based on whether the beneficiary is above or below 60 years of age, the amount needs to be entered in the appropriate field. Once these amounts are validated by the tax filing utility, you can avail the necessary deduction on your return of income. Remember that tax benefits are subject to changes in tax laws.
With these benefits of health insurance apart from financial cover, it serves in dual capacity—one as a financial shield and the other as a tax saving tool. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.