Save taxes under Section 80D deductions for the health insurance premiums paid
Health insurance is an agreement between the policyholder and the insurance provider, where the latter agrees to compensate for the medical expenses of the insured members on account of any illness or accident leading to hospitalisation. To utilise this facility, a monthly or yearly amount called premium is paid like, which is similar to a piggy bank where an individual pitches in a sum money every month, quarterly or yearly. This amount is later used when he/she encounters a critical illness or unpredictable life-threatening accidents. The most significant benefit here is, one can claim 80D deduction on health insurance premium paid.
The health insurance premium paid offers tax benefits under Section 80D of the Income Tax Act 1961. The Finance Act, in 2018, offered a higher deduction for medical premiums paid for a senior citizen. The government encourages the citizens to waive off their uncertain medical bills up to a specific limit under this section. The 80D deduction on health insurance premiums paid for a given financial year can be utilised for health insurance premium for self, spouse and dependent children under a maximum limit of Rs 25,000 which includes preventive health check-up of a maximum of Rs 5,000.
The Income Tax Act appreciates people for buying health insurance by allowing deduction on payment of premiums towards their insurance policies. In the case of a senior citizen, the maximum limit is raised to Rs 30,000, and addition of Rs 5,000 for preventive health check-up can be claimed for health check-up of parents. In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs 1,00,000.
For example, Mr A has taken a family floater plan wherein the annual premium is Rs 15,000 for self, spouse and dependent children. He has also gone for a preventive health check-up which cost him Rs 10,000. As far as the premium is concerned, he can claim 80D deduction on health insurance premiums paid as the premiums are way below Rs 25,000. In case of preventive health check-up out of Rs 10,000, he can claim a maximum of Rs 5,000, so totally Mr A can claim Rs 20,000 (Rs 15,000 + Rs 5,000) under the section for Health insurance premium paid towards self, spouse and dependent children.
Another example is where Mr B, who has a family floater that covers under the 80D deduction on health insurance premiums paid for self, spouse and dependent children cost him around Rs 32,000. He has also gone for preventive health check-up of self, spouse and dependent children which cost him another Rs 10,000. So, Mr B can claim only a maximum of Rs 25,000 of the premium paid since the entire amount has been exhausted in the preventive health check-up of Rs 10,000 that cannot be claimed. In case of a senior citizen, the maximum limit of Rs 25,000 is raised to Rs 30,000. Under this section, a maximum benefit is obtained by the senior citizens and super senior citizens with a higher limit.
While 80D deduction on health insurance premiums paid for the entire year helps individuals in tax saving, it also encourages individuals to effectively use their hard-earned money and plan for their health care expenses by investing in a proper health insurance plan.
By opting for a health insurance plan, in addition to the benefit of 80D deduction on health insurance premiums paid, there are many other advantages attached to it. They are:
1.Provides financial security: The cost of receiving quality healthcare is increasing in the country. While investing in a health insurance plan, a certain amount of premium is paid depending on the eldest insured member’s insured sum and age. Hence, in case of any treatment, the government and health insurance providers will cover the expenses up to the insured sum.
2.Different types of Policies: The insurance companies offer a wide range of health insurance policies to attract customers. This gives them a wide range of choices for them to choose from. This also allows in the customisation of plans that cater to an individual’s requirement.
3.Tax Benefits: One of the most important advantages is that an individual can claim 80D deduction on health insurance premiums paid. Apart from this, other sections provide tax benefits to taxpayers as well.
4.Treatment of Choice: When there is an adequate health insurance plan, the financial resources to get the treatment from anywhere in the country becomes easier. There is no more a need to compromise on medical treatment because of the financial crunch.
5.High Coverage at Low Cost: Health insurance plans with fixed benefits provide higher coverage of amounts with a lower premium, allowing an individual to save more money and get a care-free diagnosis and treatment on any medical ailments. Additionally, by making smaller claims or diagnosis of disability due to an accident, the premium is completely waived off.
The health insurance plan has become a necessity considering the fast-paced modern lifestyle because of which lifestyle diseases are on the rise. The first step here is to get maximum coverage from a reliable insurance provider. Considering the wide range of options and choices available today, it has made it easier for an individual to choose the right kind of suitable plan.
The premiums paid through online banking, cheques, drafts, credit or debit cards, etc. can only be claimed for the tax deductions under section 80D. So if you are looking for 80D Deduction on Health Insurance Premiums Paid but end up paying the premium in cash, then it would not be accepted. On the other hand, preventive health check-ups for which cash payments are made can be claimed.
For better tax saving, it is essential to choose the right kind of plan that not only offers maximum coverage, less premium and finally a more significant benefit on tax benefits. Health insurance’s primary purpose is to receive the best medical care without any strain on your finances. Rather than chasing 80D deduction on health insurance premiums paid, opt for good plans that provide a good amount of coverage as buying health insurance is a good return on investment, called health.
Visit BimaKaro.in to know more about how you can save money with Insurance under sec 80D.