What are tax benefits on medical insurance premium?
Medical emergencies are always unpredictable. It is always smart to be focused on the cure rather than the precautionary steps. The medical insurance premium is the money you pay periodically to protect yourself and your family’s future medical expenses. This premium is calculated based on the determinants like age, medical history, lifestyle-related habits, etc. Do you know that there are tax benefits on medical insurance premium?
Medical insurance comes into play only in hospitalization for 24 hours or more, which means that OPD treatments are not covered. This insurance cover also provides cost-saving benefits with income tax coverage of Section 80D, despite offering benefits of health insurance.
The Finance Act 2018 offers higher tax benefit on medical insurance premium paid exclusively for senior citizens. The tax deduction purely depends on the health insurance premium paid. You are allowed to claim a deduction of up to Rs. 25,000 per financial year for the medical insurance premium installments.
The most popularly known section 80D deduction on insurance premiums is of different types in terms of exceptions; health check-up included and the total deduction. Below are the four major types of variations of the tax exemption on medical insurance premium according to the Section 80D paid for guardians:
Self and family: For self and family coverage, the total exemption limit on the medical insurance premium is Rs. 25,000, including the health check-up of Rs. 5000 and with a total deduction of Rs. 25,000.
Self and family + parents: For self and family coverage, the total exemption limit on tax benefit is Rs 25,000 + Rs 25000 which equals to a total of Rs 50,000 including the health check-up of Rs. 5000 and with a total deduction of Rs. 55,000.
Self and family + senior citizen parents: For self and family coverage, the total exemption limit is Rs 25,000 + Rs 30,000 = 55,000 including the health check-up of Rs. 5000 and with a total deduction of Rs. 60,000.
Self (senior citizen) and family + senior citizen parents: For self and family coverage, the total exemption limit on tax benefit on medical insurance premium is Rs 25,000 + Rs 30,000 = 55,000 including the health check-up of Rs. 5000 and with a total deduction of Rs. 60,000.
In addition to the illustrations, there are few more important information to know while understanding the tax benefits on medical insurance premium. They are detailed as follows:
No tax benefits are applicable for cash payments: To avail tax benefit on the medical insurance premium, you must pay your premium that involves a tract history of your payments either through online net banking, a cheque, draft, debit or credit cards. In the case of the instalments for preventive health check-up, they can be accepted to be paid in cash.
For example: Let’s say, a family has six members of self-aged 29, spouse aged 32, two children 5 and 3 years and parents at 63 and 60 years of age. So they will have to buy a family floater health insurance that covers the primary member and all his/her dependents for which a yearly premium will be Rs. 15,000.
Tax benefits vary for senior citizens: The tax benefit on medical insurance premium for senior citizens varies, as their health and income will differ. Super-senior citizens over the age of 80 years who don’t have any insurance policy can also claim the income tax deduction for their medical treatment expenses of up to Rs. 30,000 for every financial year.
You can claim almost up to Rs. 30,000 for medical expenses on behalf of your senior citizen parents if they do not have a health insurance policy by registering them into your family floater.
Section 80DDB deduction for treatment of specified illness: Under this section, you can get a deduction up to Rs. 1,40,000 with senior citizens having Rs. 60,000, and Rs. 80,000 for extreme or super-senior citizens for medical expenses incurred. For the diseases like renal failure, cancer, Parkinson infections and another such list of diseases given in the Rule 11DD.
Section 80D deduction for treatment of dependants with a particular type of disability: Here you can claim a benefit of up to Rs. Seventy-five thousand depending on the types of expenses you had overall incurred on medicines, treatments, preservations, rehabilitations and other medical-related expenses with dependents with disabilities. You can claim almost 1.25 lakhs for severe and extreme disabilities of any of your dependencies. You need to provide all the proof of these medical bills as support while applying for tax claims.
Section 80U deductions for persons with disability: A person who has is disabled can also claim income tax deduction under Section 80U for up to Rs. 75,000. In the case of disability, the limit can be increased up to Rs. 1.25 lakhs.
Section 17 deductions on the Medical Allowance: The money paid with your employer’s monthly salary towards the medical treatment expenses of self and dependants, an amount of up to Rs. Fifteen thousand can be claimed for the financial year.
Section 80D and 80C deductions: We have looked into section 80D, but we also have section 80C, which also aids in income tax benefits on medical insurance. Section D and C’s main difference is that Section D only offers tax benefits of up to Rs. 65,000, whereas Section 80C provides a higher coverage of up to 1.5 lakh per financial year.
The tax benefit on medical insurance premium is just an incentive provided by the government to encourage more people to opt for health insurance policies. So, while choosing an appropriate policy, consider other factors and not rely entirely on the income tax benefits.
Now you know all the information on the tax benefits available for securing the future of medical health of you and your loved ones. So why still wait? Hurry up and buy the right insurance cover and secure your family and yourself. Visit BimaKaro.in to get the best insurance cover with the correct tax benefits that suit your needs.