There are various reasons ranging from a comprehensive health check-up to an unannounced emergency for which one may have to pay medical bills. Naturally, you will choose the best facilities for your loved ones at such times. When it comes to being prudent about your family and reducing their financial burden, a health insurance plan is what you should consider. You can buy health insurance and pay premiums not just for yourself but also for your spouse, children, and parents.
Buying health insurance may feel like a hole dug in your pocket; however, health insurance premium under section 80D of the Income Tax Act, 1961, makes it less of a burden by helping you save taxes. All health policies ranging from indemnity plans; that pay for the actual medical expenses to fixed benefit-based plans are tax saving health insurance plans. As a result, you can get a health insurance rebate in income tax on the premiums paid for you, your spouse, and your parents.
How does a tax deduction benefit you?
Health insurance rebate in income tax essentially means that the premiums you must pay every month; quarter or year will be reduced from your taxable income. Another noteworthy fact is that this tax deduction is not only for individuals, but the members of HUF (Hindu undivided family) are also eligible. While health insurance under 80D allows tax deductions, they come with certain limits up to which one can claim health insurance rebate in income tax.
Apart from just health insurance, one can also claim deductions for term insurance riders that are purchased. Term insurance premiums are eligible for tax deduction under 80C of the Income Tax Act; however, any additional health rider, such as a critical illness rider or an accidental benefit rider, can be claimed as health insurance under 80D.
What are the limits of tax saving health insurance?
- The health insurance premium under section 80D deductible for you, your spouse, and your children is Rs. 25,000. Along with this, if your parents are above 60 years, their limit is Rs. 50,000. So, in such an arrangement, you can deduct a total of Rs. 75,000.
- Tax deduction under 80D comes with a limit of Rs. 50.000 each for you and your parents if both the parties are above 60 years of age.
- For HUF and NRIs, the limit is Rs. 25,000, where HUF can claim 25,000 for themselves and their parents with health insurance under 80D.
- Along with this, you can now also claim benefits for preventive health checkups of Rs. 5,000, which are included in the overall deduction.
Under which cases can you not claim tax deductions under 80D?
- Health insurance under 80D is not eligible for tax deductions if you pay a premium for your siblings, grandparents, working children, or any other relatives.
- Health insurance premium under section 80D will not be given an exemption if they are paid in cash, except for preventive health checkups.
- If, as an employee, your company pays the premium from your end, then it cannot be claimed.
While understanding the technicalities of tax deduction under 80D, it is also essential to keep in mind that all these deductions make health insurance more affordable. It encourages you to get health covers to protect you and your family from any financial burden. So, buy a health plan and be physically and emotionally present with your family in the time of need and stand strong together.
