The current pandemic has highlighted the increasing uncertainties in life. Moreover, medical expenses are continuously on the rise. Leading to financial stress due to the steep price of adequate healthcare. So, adequate financial preparedness to combat such testing days becomes essential. Purchasing health insurance equips you for unfortunate times.
What Is Health Insurance?
A health insurance policy is a legal agreement between the insured and the insurer. The insurance company receives a premium from the policyholder in exchange for covering the insured’s medical costs, including those for hospitalisation, day care, post- and pre-hospitalization, etc.
Health insurance provides financial coverage for medical treatments. It covers the expenditure towards hospitalisation, medicines and consultation fees.
Are There Any Tax Benefits Associated With Health Insurance?
Along with providing for your medical expenses, Health insurance provides an added tax benefit under Section 80D of the Income Tax Act, 1961.
Multiple Premium Policy - You can avail of deductions from your total income for premiums paid towards your health plan. The premiums may be paid for yourself, your spouse, your dependent children, and your parents. The deduction amount varies according to the taxpayer’s age, and the table below provides the details:
Sl.No
|
Scenario
|
Persons Covered
|
Premiums Paid (In ₹.)
|
Total Deduction under 80D (INR)
|
|---|
|
|
Self + Family
|
Parents
|
|
|---|
1.
|
Self + Family
|
25,000
|
-
|
25,000
|
2.
|
Self + Family + Parents (below 60 years of age)
|
25,000
|
25,000
|
50,000
|
Family in the table above means spouse and dependent children. And senior citizens are defined to include Indian residents of age 60 years or more.
Single-Premium Policy - You can claim a proportionate deduction in case of a single premium policy with a validity period of more than one year. This amount is derived by dividing the lump sum amount by the number of policy years. The amount is subject to the limits as captured in the table above. With so many advantages, you should buy the right health insurance policy immediately.
Some Key Points
1.Payments By Hindu Undivided Family (HUF) -An HUF can pay premiums for its members. If the member is less than 60 years of age, the deductible amount is ₹25,000. Whereas, in the case of senior citizens, the permissible deduction is ₹50,000.
2.Payment Mode - Premiums paid in cash are not eligible for deduction.
Kotak Health Shield - A Comprehensive Health Insurance Plan
Kotak Health Shield is a fixed-benefit comprehensive health insurance plan. It provides coverage for four critical ailments under a single plan:
1.Cancer
2.Cardiac problems
3.Liver diseases
4.Nerve disorders
You can also provide your family with financial security in case of death or disability due to an accident. Moreover, you can cover your spouse under the same policy.
In addition to the base cover, you can also opt for added benefits and coverage for a nominal extra price. Such benefits include
1.Daily hospitalisation cash
2.A premium waiver on the diagnosis of listed health conditions
3.Regular income on the detection of major ailments covered under the plan
Finally, you get the much-needed features like coverage for second opinions and emergency medical evacuation under the plan’s ‘In-built Wellness Benefit’.
In addition to all the above benefits and features, Kotak Health Shield offers tax deductions for the premiums paid under Section 80D of the Indian Income Tax Act.
Thus, you can ensure financial protection against various medical exigencies for you and your family, along with availing tax benefits.
Conclusion
Availing health insurance is a health shield for you and your loved ones. It helps in ensuring financial stability at times of medical emergencies. Moreover, the amount paid towards premiums helps in saving tax. However, tax saving shouldn’t be the principal goal. You must buy a health insurance deductible policy to ensure your family’s access to quality medical care whenever necessary.
FAQs
How much Tax Benefit can I get on Health Insurance?
Under Section 80D of the Income Tax Act, the health insurance premium has tax advantages. The highest amount that may be saved under Section 80D (₹25,000) for individuals paying taxes at rates of 5.20%, 20.8%, and 31.2% is, respectively, ₹1,300, ₹5,200, and ₹7,800.
Health insurance Tax Benefit for Senior Citizens
According to Section 80D of the Income Tax Act, policyholders 60 years of age and over are eligible for an annual tax advantage of up to ₹50,000 when health insurance deducts medical expenses and payments.
Depending on the tax filer’s income sources, different Income Tax Return (ITR) documents are required. But regardless of our sources of income, some documents are required for every taxpayer. Here is a list of typical ITR documents needed in FY 2021–2022.
What documents do I require to claim the deduction?
1.Pan card
2.Adhar Card
3.Form 16
4.Form-16A/ Form-16B/ Form- 16C
5.Bank Account details
6.Form 26AS
7.Home Loan Statement
8.Tax Saving Instruments
9.Capital Gains Details
10.Rental Income
11.Foreign Income
12.Dividend Income
