Every time you think of investing in something, the first thought that comes to mind is how the investment can help you save tax. And, health insurance is no different. Apart from its numerous benefits, a health insurance can also help you save tax. The claim paid by you for your and your dependent family members’ health insurance is eligible for deduction under Section 80D. So, a health insurance has the dual benefits of saving corpus for you in case of a medical emergency and tax saving, too.
Who Can Avail the Benefit?
If you have a health insurance plan for family, you or your spouse can claim the deduction. In such a case, where you have a family plan, the tax benefit availed by your individual family members can reduce your tax liability. Your spouse, children, and dependent parents can benefit under the exemption offered in this section.
For an HUF, the tax deduction is available on an the premium amount of an individual, subject to the upper limit of deduction.
Let’s look at the ways you can save tax by investing in a medical insurance.
Tax Saving on Premiums
You can avail exemption for Rs. 25,000 on the premium paid for the health insurance plan for family. And, for senior citizens’ health insurance premium, the amount of exemption can go up to Rs. 30,000 if your spouse is 60 years old. This means that you can avail an annual deduction of maximum Rs. 55,000 on the health insurance premiums paid by you.
More Benefits on Health Check-Up
Additionally, under this limit, you can avail a deduction of Rs. 5000 every year on preventive health check-ups during the policy term.
Benefit Doesn’t Extend to Cash Payments
If you want to claim a deduction, the policy premium should only be paid in certain ways, such as through a cheque or debit/credit card because if you pay it in cash, you can’t avail the deduction. A health check-up, on the other hand, can be paid for in cash and you can still avail the same benefits.
Tax Saving for Critical Illness Insurance
If the insurance is claimed for a specified critical illness, you can avail a deduction of up to Rs. 40,000; Rs. 80,000 in the case of senior citizens. The list of critical illnesses is specified in section 11DD. If you have a critical illness insurance, you need to attach a doctor’s certificate with your tax return.
Tax saving for dependent with disability
If you are incurring treatment expenses for a person with disability (only if the person is your children, sibling, or parents), you can avail a deduction of up to Rs. 75,000. A caretaker can avail a deduction of Rs. 1.25 lakh against severe disability, which includes medical treatment or training rehabilitation.
A medical insurance covers the cost incurred in your medical treatment due to an illness or disease. The insured can claim reimbursement on the treatment expenses or the payment is made to the care provider directly.
Medical insurance is an essential part of your investment portfolio, and the primary reason for that is it protects you in case of a medical insurance. And, if you can save tax with such an investment, all the better, right?