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How health insurance policy can help you to save on Income Tax?

One of the things that have become notably more and more expensive in the past decade, is the cost of healthcare around the world. As more and more people become unwell due to environmental factors and lifestyles, critical illnesses are on a rise. Many of us feel the need to consult a doctor on some of our health conditions, however, very few of us take the actual step of going to a hospital for a check-up or even go ahead with a preventive treatment before it is too late. In times like these, the need to take a robust health insurance policy can’t be undermined. There are many benefits that you can reap by making sure that you have a comprehensive health insurance policy in place. There is of course the direct benefit of receiving financial compensation in case you are hospitalized for more than a certain period for any reason. Apart from that, you can also have other benefits including the health insurance tax benefit which you can benefit from, making the most of your investment. Let us find out what is the tax benefit from health insurance all about.

What are health insurance tax benefits?

The health insurance tax benefits refer to the rebate that is extended to the policyholder under the Income Tax Act. There are many sections of the Income Tax Act, however the section under which the medical insurance tax benefits can be claimed is Article 80D. under this, the premiums paid towards their health insurance by an individual can be claimed as a deduction from their income. Apart from taking the regular plans, the deduction can also be claimed for the critical illness plans as well as top-up health plans. Even the health insurance policy you take for your dependents such as a spouse, dependent parents, and children can be eligible for claiming this benefit. This benefit is separate from the deduction already claimed under section 80C. Medical expenses for dependent senior citizens can also be claimed under section 80D.

How much money can you claim as income tax benefits?

The upper limit of the deductions that can be claimed under 80D can go up to INR 25,000 annually.  A thing to keep in mind when claiming this deduction is that a year refers to the financial year instead of the calendar year for this purpose. For self, family, and children the taxpayer can claim up to INR 25,000 as an amount for insurance premium, and add another INR 25,000 for their dependent parent’s medical expenses taking the total amount that can be claimed up to INR 50,000. If the parents are senior citizens (being over 60 years of age), the insurance and medical expenses that can be claimed can go up to INR 50,000 taking your total eligibility to INR 75,000. Preventive health check-ups amounting up to INR 5,000 can also be claimed as deductions separately apart from the limit mentioned above.

You can take a policy for yourself, or your family members to get the benefit of these plans. You may need to produce evidence of your payments for the premium and therefore it is advisable to store your payment records. This way the policyholder can go ahead and claim a considerable sum as deductions in the income tax and effectively getting that amount back in their account.

To find out more information about the various health insurance policies that you can take for yourself and your loved ones, you can go to the IIFL website and compare the best available policies. You can easily evaluate the various aspects of a policy and make the best choice according to your priorities.

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