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Ref. No. KLI/22-23/E-BB/492
Tax benefits of health insurance plans are a valuable incentive for individuals seeking financial relief while prioritizing their well-being.
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 tax benefit 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.
In the pursuit of overall financial well-being, health insurance emerges as a crucial component that not only shields individuals from unforeseen medical expenses but also offers valuable tax benefits. Understanding the tax advantages associated with health insurance plans can significantly impact financial planning and contribute to a more secure and resilient financial future.
One of the primary tax benefits of health insurance plans lies in the premium payments. Under certain tax regulations, individuals can often claim a deduction for the premium amount paid towards their health insurance policies. This deduction serves as a valuable tool to reduce taxable income, offering a financial incentive for individuals to invest in comprehensive health coverage.
Additionally, some health insurance plans come with a deductible – the amount policyholders must pay out of pocket before the insurance coverage kicks in. This deductible expense can also be eligible for tax deductions, further easing the financial burden associated with medical costs.
Individuals can leverage tax benefits under Section 80D of the Income Tax Act on health insurance premiums. This section allows taxpayers to claim deductions for the premium payments made towards health insurance policies for themselves, their spouses, dependent children, and even their parents.
The maximum deduction limit varies based on the age of the insured individuals. For instance, individuals below 60 years of age can claim a higher deduction compared to senior citizens. Additionally, an additional deduction is allowed for premiums paid for policies covering parents, providing further financial relief.
Many health insurance plans incentivize preventive healthcare by offering coverage for annual health check-ups. Under the Income Tax Act, the cost of preventive health check-ups can also be eligible for tax deductions, subject to certain limits. It encourages individuals to prioritize regular health screenings, fostering a proactive approach to well-being while simultaneously enjoying tax benefits.
Certain health insurance plans provide coverage for critical illnesses or disabilities, offering financial support during challenging times. From a tax perspective, the benefits received under these policies are usually exempt from taxation, providing policyholders with a tax-free financial cushion when faced with severe health challenges.
Tax-saving in health insurance emerges as a vital tool for individuals seeking financial relief while safeguarding their well-being. While these policies offer numerous benefits, it is crucial to understand their limits to make informed decisions about coverage and financial planning.
The health insurance tax benefit 80D deductible for you, your spouse, and your children is ₹25,000. Along with this, if your parents are above 60 years, their limit is ₹50,000. So, in such an arrangement, you can deduct a total of ₹75,000.
Tax deduction under 80D comes with a limit of ₹50,000 each for you and your parents if both parties are above 60 years of age.
For HUF and NRIs, the limit is ₹25,000, whereas 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 ₹5,000, which are included in the overall deduction.
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 premiums 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 deductions 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 coverage to protect you and your family from any financial burden. So, buy a health plan to support your family in their time of need, and stand strong together.
1
Health insurance premiums paid for yourself, your spouse, children, and parents qualify for a deduction under Section 80D of the Income Tax Act. The deduction limits vary based on the age of the insured individuals.
2
Yes, to claim tax benefits, the premiums must be paid by any mode other than cash. Additionally, payments made for policies covering in-laws, siblings, or other relatives are not eligible for deductions.
3
Yes, you can. Under Section 80D, the expenses incurred on preventive health check-ups for you, your family, or your parents are eligible for an additional deduction over and above the premium paid for health insurance.
4
The maximum limit for claiming tax benefits depends on the age of the insured individuals. For those below 60 years, the limit is higher, while for senior citizens, it is more favorable. It’s advisable to check the current tax regulations for specific limits applicable to your situation.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
