All You Need to Know About Health Insurance Tax Benefits

Are you worried about the financial blowback of a medical emergency? Then, opting for a health insurance policy can help you cover such costs. Not only that, but these plans also ensure you receive the best treatment when needed.

The advantages of health insurance policies are amplifying their popularity year after year. Along with offering crucial financial support during periods of health difficulties, these policies also bring income tax benefits, which further their appeal.

Knowing these health insurance tax benefits can help you, the policy buyer, maximise your savings while enjoying the advantages of a comprehensive policy.

The medical insurance tax benefits are lucrative and very appealing. Moreover, they are extensive and offer various exemptions that help buyers secure higher savings. Let’s break down these benefits to understand them better.

Tax Benefits on Premium Paid for Self, Spouse and Children

The primary medical insurance tax exemption is available against the premium you pay yourself, your spouse and your family. Now, there are two ways this works:

• If you and your family are all under 60 years old, excluding your parents, the deduction limit is ₹25,000 per annum.
• On the other hand, if the policyholders and their spouses are over 60, this deduction rises to ₹50,000 per annum.

Additional Tax Deduction for Parents

The income tax benefits on health insurance plans extend to the premium you pay for your parents as well. Here is how it works:

• If your parents are below the age of 60, then the additional deduction limit is capped at ₹25,000 per annum.
• Similarly, if they are above the age of 60, then you can claim an additional exemption of ₹50,000 per annum.

Therefore, if you include the health insurance premium paid on behalf of your parents below the age of 60, then your total deduction here would be ₹50,000 per annum. Simultaneously, if your parents are above the age of 60, then this deduction will rise to ₹1,00,000 per annum.

Deduction against the Preventive Health Check-Up

According to Section 80D of the IT Act, health insurance tax benefits can be enjoyed against preventive health check-ups. The idea here is to encourage taxpayers to manage their health proactively.

The deduction limit here is set at ₹5,000 for health check-ups for themselves, spouses, children, or parents, irrespective of age. It is essential to note that this deduction for preventive health check-ups is included in the premium deduction limit and not over and above it.

Tax Benefits for Hindu Undivided Families (HUFs)

The Hindu Undivided Families (HUFs) are also eligible for medical insurance tax benefits under Section 80D of the Income Tax Act. This works in two ways:

• If the family members are below 60, the deduction is ₹25,000 per annum.
• If one family member is above the age of 60, then the deduction is ₹50,000 per annum.

This provision of claiming income tax benefits on health insurance plans helps the HUFs collectively save on their income tax payment.

Tax Deduction for Companies

Employers offering group health insurance to their employees can claim income tax benefits on it. They can include it in their business expenses and apply for the deduction. However, an important point to note here is that this benefit applies only to employers, not employees.

Employees covered under a group health insurance plan their company provides do not get direct tax benefits for employer-paid premiums. Having said that, if the employee voluntarily purchases health insurance, he/she can enjoy the deduction mentioned above.

Health Insurance Tax Benefits for NRIs

NRIs can also claim tax deductions on health insurance policies purchased in India. Under Section 80D, they can enjoy the same deduction limits applicable to resident Indians.

Therefore, they will receive ₹25,000 per annum if they are under 60 and ₹50,000 per annum if they are senior citizens. Additionally, they will enjoy the additional deduction applicable to the parents.

Advantages of Having Health Insurance

While tax benefits are one of the obvious advantages of investing in a health insurance policy like this, there are more reasons to choose it. Here are some of the major ones:

• Financial Safety Net: Health insurance plans lower the financial burden of unplanned medical expenses.
• Comprehensive Coverage: These policies usually cover a range of medical services, including hospitalisation, day-care, surgery, etc.
• Access to Quality Healthcare: With the right health insurance plan, you can access the best treatment.
• Cashless Treatment: When you get admitted to one of the network hospitals of the policy, you can avail yourself of the cashless treatment facility. It is a big bonus in such emergencies.

Health insurance plans are essential, especially when considering the rising healthcare cost. With this policy, your finances are well-covered, and you can access the best treatment. Along with all these, the applicable health insurance tax benefits are a big bonus for every policy buyer. It helps them save on taxable income while ensuring coverage for themselves, their families, and their parents.