The constantly rising medical and healthcare costs have made it very crucial that you avail a health insurance policy for yourself and your loved ones. Apart from covering your healthcare costs in times of need, a well-defined health insurance policy can also save you a lot of money in terms of tax benefits. Even after these many benefits, the fact of the matter is that majority of Indian population still do not have a health insurance policy.
You can now apply for a health insurance online, without any hassle of visiting a physical branch. Such insurance policies are cheap with a minimal annual instalment of Rs. 15000 for a Family Floater of 10 Lakhs. It not only insures you, but also keeps your family and spouses secured from any unfortunate accidents. The tax benefits under Section 80D are for everyone including your children and parents. Hence, even if your children are not dependent on you, they would get equal tax benefits from the policy.
How Can You Avail Tax Benefits on Health Insurance Policies?
- As a policyholder, you are eligible for a tax exemption up to Rs. 25000 annually on the premium paid towards the health insurance You can avail its benefits for yourself, your spouse, children and all your dependents. If you and your spouse are aged 60 years or above, the tax-deductible limit increases up to Rs. 30000.
- If you are paying the premium for a policy availed by one of your parents who is above the age of 60 years, you get tax benefits of up to Rs. 30000 annually. The tax benefits are available only if you pay the premiums through cheques, cards or any other online modes. If you are paying through cash, you are not eligible for any tax benefit. However, payments made through cash for the preventive medical tests and check-ups, are tax-deductible.
- If you have purchased a Family Floater for all the members of your family, you get a reduction in the tax liability on the individual premiums paid by the members. Here is an example to illustrate it:
You have purchased a family health insurance policy for yourself, your partner, children and parents. The annual premium paid towards your plan is Rs. 14000 and the one you are paying for the policy availed by your mother amounts to Rs. 26000. The expenditures towards health check-ups for yourself and dependents is Rs. 16000 and for your mother is Rs. 6000. Hence, the total premium amount comes down to Rs. 40000 (15000 + 26000). And the expenses for health check-ups amount to Rs. 24000 (16000 + 6000). All this reduces your tax liability by Rs. 50000 (43000 + 5000 + 5000) per year.
Critical illness cover availed with a health insurance plan makes you eligible for more tax deductions for senior and very senior citizens up to Rs. 40000 and Rs. 60000, respectively. If the hospital expenses are incurred due to an illness included in the list of critical illnesses like cancer, or cardiac strokes, you are eligible for a tax-exemption ranging from Rs. 40000 to Rs. 80000.
Under Section 80DD, you get tax-exemptions up to Rs. 75000 for the expenses incurred for a dependent disabled person in your family. Whereas, for rehabilitation, and nursing expenses as a caretaker, you are allowed a tax-deduction up to Rs. 1.25 Lakhs.