Despite crucial features like assistance in a medical emergency, reimbursement for both pre and post hospitalization expenses and medical bills, health insurance policies have features like tax exemptionfor you in its mixed bag of benefits.The premiums you pay towards health insurance for self, your family, and spouse provide youwith sufficient medical help as well as reduce your annual tax liability.
Do you have a health insurance policy for self? You must get one if you’re not currently having it. In fact, those who plan future for self and their family better know how to reduce their tax liabilities. They either choose life or health insurance policies to invest in for a secure future of their loved ones, in the case of an unfortunate event of an accident or prefer to invest in ELSS Mutual funds, PPF (Public Provident Fund), NSC (National Savings Certificate), KVP (KisanVikas Patra) etc.
Experts say that you should ensure the safety of your health before being able to do business and the best way to do so is to buy a health insurance policy with sufficient cover.Also, if youtake a health insurance plan, it entitles you to receive tax benefits, thereby reducing your annual taxable income.
Benefits for Extended Family Members
If you are the breadwinner of your family and willing to buy health insurance plans for your children, spouse, and parents, you can avail tax benefits under section 80D of income tax act, 1961. You can avail these benefits as an individual as well as when you buy it for your parents no matter whether they are dependent on you or not.
Well, the measure of tax benefits is subject to the age of the person insured. However, there is a cap of maximum benefit that you can avail is Rs. 25,000 per year except the age of the insured is not above 60 years.In the other case, if the insured is above 60 years of age or a senior citizen in your family, then the cap of maximum tax benefit is Rs. 30,000. Thus, you can avail the maximum benefit of up to Rs. 55, 000 a year if you and any of your parents have health insurance policies while you being below 60 years of age and your parent being a senior citizen.Despite all, you can still avail tax benefit of Rs. 60,000 annually if you are above 60 years of age and your parent being a senior citizen.
Health Insurance Riders from a Life Insurance Company
You might not know that you can avail tax benefits under section 80D of income tax act, 1961 along with your existing life insurance policy if any. You do not have to separately purchase a health insurance policy to avail tax benefit under this section. For this, you can buy additional coverage through rider options like critical illness rider and/or medical insurance rider. Thus, if you buy health insurance policy riders from a life insurance company, you are eligible for availing tax benefits for health insurance policy.
Tax benefits of Health Check-ups under Health Insurance
The minimum benefits you can avail on the premiums paid towards your health insurance policy is Rs. 25, 000. This means that you can avail medical check-ups of up to Rs. 5, 000. Thus, paying an annual premium of Rs. 20, 000 along with a medical check-up costing Rs. 5, 000 enables you to avail tax benefits of up to Rs. 25, 000 in a year.
Also, you can avail medical treatment at a hospital of your choice, which can be one of the network hospitals of your insurer, irrespective of choosing planned or unplanned hospitalization.
Cash Payment Adversely Affects Tax Benefits
Most of the insurance holders do not know that paying the premium in case violates the rule of income tax benefits. It is, therefore, recommended to pay policy premium using internet banking, cheque, debit or credit card, or a draft.If you are willing to avail preventive health check-ups, then you are allowed to pay your premium acash payment as yourpremium.
The Bottom Line
Although health insuranceplans are not recommended for tax saving benefits, you can still invest in health plans for additional benefits. Therefore, health plans should only be chosen for tax savingfor reducing the cost of healthcareand medical treatment at a hospital full of medical facilities and qualifies doctors.