Health insurance is crucial and a must-have for everyone. At the rate at which health expenditure is soaring, it is almost critical to go for an adequate mediclaim policy for yourself and your family. The absence of a health insurance plan is likely to blow all your hard-earned savings, especially in case of a critical illness, hospitalization or accidents in the family. Thus, a comprehensive medical coverage safeguards both you and your family’s health in the wake of unforeseen circumstances.
Health insurance is viewed as a significant investment and therefore tax deductions are offered u/s 80D of the Income Tax Act, 1961. Under this section, deductions are provided on the policies for self, spouse, dependent children and parents. Section 80D of the Income Tax Act, 1961 allows for deduction of money towards health insurance and assumes great significance in tax planning and personal finance.
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What is a Mediclaim Policy?
Mediclaim Policy is synonymous with health insurance and safeguards you and your family against financial risks arising out of a medical emergency. In such a case, the medical expenditure is borne by the insurer.
Eligibility for tax benefits under Section 80D
One can avail tax deduction u/s 80D of the Income Tax Act, 1961 in case you have paid a premium on the health insurance policy taken for the following:
- Self;
- Your spouse;
- Dependent children;
- Your parents
Types of Deduction Available under section 80D
Four types of deductions can be claimed u/s 80D. These include:
- Premium paid for yourself and your family
- Premium paid for your senior citizen parents
- Preventive health care expenditure
- Medical expenses of super senior citizens
Section 80D Exemption Limit for A.Y. 2020-21
Under Section 80D of Income Tax Act, 1961 an individual or HUF can avail deduction for payment of health insurance premiums &preventive health care expenses for self, spouse, dependent children and parents. The maximum deduction for AY 2020-21 is as follows:
- 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.
NOTE:
Section 80D has been bifurcated into two more sections for specific insurance requirements.
Section 80DD
You can avail a tax benefit of up to INR 75,000 basis the expenses incurred for nursing, training or rehabilitation of a dependent with disability. In case of an extreme situation, the benefit goes up to INR 1,25,000. In either of the cases, a supporting medical certificate has to be submitted as proof.
Section 80DDB
In a scenario where medical expenses have been incurred on critical ailments (cancer, chronic renal failure, Parkinson’s disease etc.), a maximum deduction 40,000/- or the amount actually paid, whichever is less. In the case of a senior citizen and super-senior citizen, Rs.1, 00,000 or amount actually paid, whichever is less. It is mandatory to attach a medical certificate while filing income tax.
In today’s day and age, it isn’t uncommon to fall prey to health hazards. This makes it pertinent to have an evolved health insurance plan, so you can prevent payment of hefty medical bills in case of an injury. In a scenario you don’t have enough cash for a medical treatment, you might have to apply for a loan. This is why a health insurance policy comes in handy and acts as the saviour. As they say, invest your money in the right plan and of course, the right time!
(Republished with Amendments)
can i avail benefit of exemption of Rs .5000 sec.80d without having health insurance scheme