Sharma ji’s son knows that medical emergencies never announce themselves. He realises that when lifestyles are changing and the cost of healthcare is on an all-time high, his best way forward is buying a health insurance policy for himself and his family.
He knows that when a medical situation arises, these health insurance policies will provide him with the financial backup that he may need in the face of these health emergencies.
Sharma ji’s son also knows that investing in a medical insurance policy would earn him some benefits under the Income Tax Act.
This is probably why your parents have compared you with Sharma ji’s offspring and asked you to be more like him/her.
The importance of health insurance in today’s day and age cannot be underestimated.
When you don’t have a proper plan in place, any health emergency has the potential to derail your life. People often think of a health insurance policy as just another expense that’s cutting away at the money they have in hand.
However, we fail to realise that a good insurance policy will cover medical expenses like medical test costs, doctor’s fees, ambulance charges, and even hospitalisation costs.
By just paying a small premium, you’re covering your pre and post-hospitalization charges. In fact, if you don’t file a claim for any treatment during a particular year, you may even earn a No Claim Bonus in the next year.
What’s more, you can claim certain Income Tax benefits as well!
Yes, that’s right. The payments that you make towards health insurance premiums are eligible for deduction under section 80D of the Income Tax Act.
In this article, we’re going to take a look at the provisions available under section 80D of the Income Tax Act and the deductions that you can claim!
What is the eligibility for claiming deduction under Section 80D?
An individual or Hindu undivided family (HUF) can claim deduction under section 80D. The individual can get a deduction of the following amounts paid for self, family and the parents –
- Medical insurance premium
- Preventive health checkup expenses
- Actual medical expenses (if there isn’t an insurance policy in place)
The family covers the spouse and dependent children.
A HUF can claim the deduction of the medical insurance premium or actual medical expenses paid for any member of the family.
How much deduction is allowed under section 80D?
An individual can claim upto ₹ 25,000 for self and family. If the insured person is a senior citizen (60 years or more of age), the maximum deduction will be ₹ 50,000.
If the medical insurance policy is taken for parents, the maximum deduction is ₹ 25,000. If any parent or parents are senior citizens, the limit will be ₹ 50,000.
In the case of HUF, if the insured person is less than 60 years of age, the deduction is ₹ 25,000 else it is ₹ 50,000.
For payment towards preventive health checkup, the taxpayer can claim a deduction of upto ₹ 5,000 (which is included in the overall limit of ₹ 25,000/ 50,000).
Seems confusing? Don’t worry. Here’s the total maximum deduction that you can claim u/s 80D:
|Sr. No||Medical Insurance Cover||Exemption Limit||Total Exemption|
|1||For Self & Family||25,000||25,000|
|2||For Self & Family including parents||25,000+25,000||50,000|
|3||For Self & Family Including Senior Citizen Parents||25,000+50,000||75,000|
|4||When Self, Family & Parents are Senior Citizens||50,000+50,000||1,00,000|
What should be the mode of payment?
You can claim the deduction of medical insurance premium only if you have paid through any other mode except cash. Hence you should use net banking, cheque or mobile wallets to make the payment.
However, you can pay the preventive health checkup expenses in cash and avail of its deduction.
How to claim the deduction if a policy is taken for more than 1 year?
If you have taken a medical insurance policy for more than 1 year and have paid the lump sum premium in 1st year, you can claim the appropriate fraction every year.
For instance, if the total premium amount is ₹ 60,000 and the policy is opted for 3 years, the taxpayer can claim ₹ 20,000 every year.
In a nutshell, a medical insurance policy brings tower benefits – it cuts the tax outgo and proves to be a friend during a crisis.
Let us know in the comment section if our today’s blog has convinced you enough to invest in your family’s health! Also, do let us know what do you want to know next about?