Save Tax & Secure Your Family with the Right Health Insurance

Do you think health insurance is just a safety net for medical emergencies? Well, a health insurance policy is much more than that. Along with shielding your family from medical expenses, health insurance also lets you save on taxes significantly. So, the dilemma is to choose between tax-saving tools and health insurance when you can have both under a single policy. With a health insurance policy, you can claim tax benefits under Section 80D of the Income Tax Act of 1961.

Health insurance tax benefits also depend on the type of policy you purchase. Therefore, all you need to do is plan wisely and select your health insurance carefully. On the one hand, you can save your finances from medical inflation and rising treatment costs, and on the other hand, you also get to save on taxes. Read on as we discuss all about health insurance tax benefits in this guide.

The tax benefits under the Income Tax Act of 1961 are as follows:

Tax Benefits on Health Insurance Premiums

Tax savings on health insurance premiums serve as an incentive for individuals who purchase health insurance plans. However, the tax benefits and deductions that you get also depend on the type of tax regime you select when filing your Income Tax Return. Currently, health insurance tax benefits can only be availed under the old tax regime.

The tax benefits under the Income Tax Act of 1961 are as follows:

1.Section 80D of the Income Tax Act of 1961

An individual may purchase a health insurance policy for themselves, their spouse, or their children. In either case, the policyholder can claim tax benefits of up to ₹25,000 u/S 80D of the Income Tax Act of 1961.

Further, you may also claim tax deductions up to ₹25,000 if you purchase health insurance plans for your parents. This deductible applies regardless of whether parents are dependent.

2.Deductions for Senior Citizens

Individuals aged 60 years or older are considered senior citizens. If you purchase health insurance for your parents who are above 60 years of age, you can claim deductions of up to ₹50,000 under Section 80D of the Income Tax Act of 1961.

3.Deductions for Preventive Health Check-Ups

Along with the premium paid, policyholders can also claim preventive health check-up expenses of up to ₹5,000. However, this ₹5,000 is calculated within the limit of ₹25,000 or ₹50,000 tax deduction limit of Section 80D of the Income Tax Act of 1961. Even if the preventive health check-up cost was paid in cash, the deductions can be claimed.

4.Section 80DD and Section 80DDB of the Income Tax Act of 1961

The Income Tax department also provides you with tax benefits for the treatment expenses of a disabled person. The disabled person could be either the assessee, their spouse, children, brother, or sister. Under Section 80DD of the Income Tax Act of 1961, this tax deduction is up to ₹75,000. For people with a physical disability of above 80%, the deduction limit is ₹1.25 lakhs.

Similarly, tax deductions can be claimed for medical treatment expenses incurred on oneself or dependents. The claim amount can be either ₹40,000 or the actual claim amount, whichever is lower. For senior citizens, the claim amount is up to ₹1 lakh.

Even if you do not have health insurance, Sections 80DD and 80DDB of the Income Tax Act of 1961 allow you to claim tax benefits for medical expenses.

Eligibility for Health Insurance Tax Benefits

As mentioned above, Section 80D of the Income Tax Act of 1961 provides tax deductions for health insurance premiums paid under the old tax regime. You can claim tax deductions up to ₹25,000 and ₹50,000 (for senior citizens). The next question that may come to your mind is, who is eligible for this deduction?

Indian residents and Hindu Undivided Families (HUFs) qualify for tax deductions u/ S 80D of the Income Tax Act of 1961. If you fall into any of the categories, you can claim tax deductions for health insurance premiums paid for yourself, your legally wedded spouse, dependent children, and parents (dependent and independent).

Winding Up

Health insurance offers multiple benefits, from financial protections against medical expenses to tax benefits and easy access to quality healthcare, to mental peace. A single plan can offer you multiple benefits. If you haven't already purchased one, now is the perfect time.

Purchase a health insurance policy and avail the dual benefit of both medical coverage and tax benefits. Review various plans and compare them to select the one that best suits your needs.

Over to You

Care Health Supreme and HDFC ERGO Optima Restore are among the best health insurance policies in India today. It is a matter of your priority, coverage depth over cost effectiveness. Here’s a quick recap for you to make an informed decision.

Both offer coverage of up to ₹1 crore; Optima Restore starts at ₹3L, Care Supreme at ₹7L. Supreme offers unlimited recharge; Optima Restore offers 100% once a year, after a claim is made. Care includes OPD + unlimited e-consults; Optima lacks OPD, allows one consultation/year. Care gives a 30% discount + 500% bonus; Optima offers 8% discount + 50% bonus. Care Supreme is costlier but has more features. Optima suits budget buyers; Care fits those needing wider, long-term coverage.

Whichever health insurance plan you choose, ensure to read the policy wordings and seek advice from an expert before you make the purchase. The best health insurance is the one that covers you the way you want to be covered.

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Author Bio

Paybima Team

Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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