Health is the greatest asset for a human being. Since inflation has made medical bills costlier than ever, having a health insurance policy has its own perks, whatsoever. Investing in health insurance offers amazing returns on investment. You get coverage against expensive hospital bills that can wipe up your savings in one go. It ensures your financial stability when medical emergencies strike. Moreover, you are eligible to avail the tax deductions when you file your income tax returns. Health insurance plans that provide adequate coverage to you and your family enable you to reap multiple benefits in terms of health coverage.
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Why Should You Invest in Health Insurance Policy?
When you invest in health insurance policy, it works towards the accomplishment of two goals. It safeguards the health of your family and you (subject to policy coverage). In addition to that, it makes you eligible to reduce your annual income tax liability up to Rs. 25,000 if you are below 60 years of age. If you are a senior citizen, then this amount upgrades to Rs. 50,000. So, it provides you the financial support and you get tax benefits when you file your income tax return. These additional reasons are more than enough to buy a health insurance policy and ensure the well-being of your family and you.
Who Can Get the Coverage?
Under the domain of health insurance, there are two major variants where you invest in insurance plans. These variants are individual health insurance plan and family floater plan. In individual health insurance plan, each individual is covered separately, whereas the coverage is provided to the entire family in case of a family floater plan. Some particular insurers even let you include your parents-in-law in the same plan as well. Before you select a health insurance policy for yourself, make sure you do your own research. Don’t go for the first option you come across; take as much as time you need instead. As health insurance is an investment instrument, you get deductions when you file your annual income tax return.
Health Insurance and Tax Deduction
In order to enjoy tax deductions along with health coverage, it is a pre-requisite that you pay the premium of your health insurance policy. On the other hand, if the premium of your health insurance is paid by your employer, you are not eligible to avail the tax deductions. There is no tax deduction on medical allowance paid by the employer to the employees of a company. Under the IT Act, 1961, medical allowance is not considered as an allowance, which is tax exempted.
Generally, medical allowance is confused with medical reimbursement. Medical reimbursement is paid by an employer to its employees when they submit a specific medical bill. As contrary to the medical allowance, medical reimbursement is tax saving.
Under Section 80D of the Income Tax Act, 1961, the deduction on the health insurance premium has been given to the assesses, the quantum of deduction are as under:
- In case of the individual, Rs. 25,000 for himself and his family
- If individual or spouse is 60 years old or more the deduction available is Rs 50,000
- An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of Rs. 25,000 if less than 60 years old and Rs 50,000 if parents are 60 years old or more.
- For uninsured super senior citizens (80 years old or more) medical expenditure incurred up to Rs 50,000 shall be allowed
- A deduction of Rs. 5000 will be allowed under this section for payment of preventive health check-up of either the individual himself or his family members which includes spouse, parents and dependent children.This deduction is NOT in addition to the deduction of Rs.25000/50000 stated above, but is included in the above deduction
The amount(s) of savings make a mediclaim policy a prominent tax saving tool.
Parents health insurance and the tax benefits
When it comes to tax planning, people generally don’t consider their parent’s health insurance as a tax-saving tool. If you are paying for your parents’ health insurance, you can claim up to Rs. 50,000 as a tax deduction when you file your annual income tax return. You are safeguarding your parents’ health and securing their future financially. In return, you get to save tax. It is a win-win deal.
Save money while safeguarding your health
Your overall health is severely affected by your lifestyle. Stress, unhealthy eating habits, lack of adequate sleep, lack of physical exercise etc. can adversely affect your well-being. A mediclaim policy acts as a savior and it protects you from facing a financial crunch due to a medical emergency. There are dual benefits of the tax deduction offered by health insurance policies. You get to save your hard-earned money that helps you to accomplish your financial goals.
Republished with amendments
