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Health insurance is a key asset to invest in, to safeguard oneself from unexpected and hefty medical bills. However, if we look at the average household in India, a very small percentage of people have medical insurance policies. So, in case of medical emergencies this becomes difficult for them to bear these expenses without digging into their savings. Among various initiatives like awareness campaigns and promotions, the Indian government offers tax benefits for medical insurance premiums. Under a special section of the income tax rule, Section 80D is used for deductions for any health plans.
If you are an individual taxpayer or file your taxes as a HUF, this section might be quite useful for you. Let’s understand how your medical and health insurance can be used for tax deduction under this clause.
1. Eligibility for deductions: The deduction under Section 80D is available only for individual and HUF taxpayers against insurance premium payments (under the old tax regime). This means, in order to claim the benefits, you must make premium payments. Moreover, an individual can also include the premium payments made for their spouse, dependent children and their parents. But premiums for any other entity or person are not eligible under this deduction.
Also, any medical expenses made for senior citizens, not covered by the insurance plan can also be added as a deductible
2. Limits for deductions and payments: There are no limits on how much coverage you get or the amount to spend on premiums. However, for each eligible member of your household under the age of 60, you can claim up to INR 25,000 under Section 80D. The same limit extends to INR 50,000 for senior citizens for premiums or expenses for medical insurance plans. It is important to note that this is a cumulative of any or any medical policies for a person.
3. Expenses for preventive medical checkups: Apart from the above-mentioned limits and criteria, the IT Act also gives rebates/deductions for medical check-ups. Not many insurance policies and plans cover the expenses of elective and preventive medical care. This means taxpayers have to pay money out of their own pockets. With this additional benefit, you can claim upto INR 5,000 for any preventive medical checkups you have in a financial year.
This would help you get some benefits and deductions for taking care of your health and your family. But, you may be required to provide proofs and justifications to claim the additional benefits.
When we look at the taxing policies and brackets, there are numerous ways to claim the benefits. With health insurance, you can safeguard yourself and your family from any major medical expenses and uncertainty. And with Section 80D, you can claim these are a tax rebate and reduce your tax liability for opting for this coverage. However, the health insurance tax benefit you gain from using Section 80D and your claims may vary with your tax profile. Every taxpayer, their tax profile and the insurance plans they opt for are different. Therefore, make sure to read the fine print, have valid receipts and understand the clauses for this deduction, before making any investments.
In case the medical insurance policy is not taken, a sr. citizen can claim upto Rs.50,000 as medical expenses under Sec. 80D with valid proof. I hope my presumption is correct.