Health insurance is one of the most important investments someone can make to assure total protection for themselves and their family in the event of a medical emergency. Health insurance policies don’t simply help you save money on medical bills; they also provide you with valuable tax advantages. Many people invest in life and health insurance for the tax advantages. Is health insurance a tax-deductible expense?
Yes, it certainly is! The premium amount paid for health insurance is tax deductible. Section 80D of the Indian Income Tax Act allows you to deduct your health insurance premiums. That is, you can deduct the amount you pay as a premium for health insurance from your taxable income (subject to certain limits). This guarantees that your taxable income, as well as your net worth, are protected.
The health insurance tax benefits that you should be aware of are listed below. These will assist you in claiming a tax deduction under the proper provisions.
- Deduction Under The Income Tax Act, Section 80D
Under section 80D of the Income Tax Act, the Government of India (GOI) allows individual taxpayers to deduct premiums paid. You can even get refunds on critical illness insurance premiums.
For you and your immediate family (spouse and children under the age of 18): In a financial year, you can claim up to INR 25,000 for yourself, your spouse, and your dependent children. The deduction maximum increases to INR 50,000 if you or your spouse is a senior citizen, (defined as someone who is 60 years old or older). Any health check-up costing up to INR 5,000 that you have during that financial year is covered by the deduction.
For Parents: Medical insurance premiums paid for parents or legal guardians are eligible for a tax deduction of up to INR 25,000 each financial year. If one of your parents is a senior citizen, the maximum limit every financial year is increased to INR 50,000.
The lower of the actual premium or the permitted limit under this clause is always the maximum amount that qualifies. This must include the cost of the medical examination.
- Deduction Under Section 80DD of the Income Tax Act
If you have a disabled dependant, you can claim up to INR 75,000 in health insurance tax benefits. This is based on the costs of nursing, medical care, and rehabilitation, among other things. You can claim up to INR 1.25 lakh in situations of serious disability. Your spouse, children, parents, or siblings are all considered dependents. You will, however, need to produce supporting medical certifications in order to claim the discount.
- Deduction Under Section 80DDB of the Income Tax Act
You can claim a deduction of INR 40,000 for all medical expenditures spent if you are being treated for a specific ailment. The benefit ceiling for claiming on behalf of a senior citizen is INR 1 lakh. This covers treatments for conditions listed in the Income Tax Act’s Rule 11DD. This deduction is available for you, your spouse, your parents/guardians, your children, and your siblings. You might claim a discount of INR 60,000 and INR 80,000 for elderly citizens (60-80 years) and super senior citizens (above 80 years).
- No Tax Benefit on Cash Payment or Group Health Insurance
To take advantage of health insurance tax benefits, premiums should be paid through internet banking, a draught, a check, or debit or credit cards. Instalments paid in cash are not eligible for a tax deduction. Payments for preventative health check-ups, on the other hand, can be made in cash and deducted. Furthermore, your employer-paid group health insurance premiums are not eligible for tax advantages.
Now that you’re aware of India’s health insurance tax benefits, it’s time to put an end to exorbitant medical costs and begin saving taxes on medical insurances. Health insurance plans not only protect you and your loved ones from unanticipated medical problems, but they also help you save a lot of money on taxes. As a result, health insurance is both a tax-saving tool and a wise investment in the future of you and your family.