How Buying A Health Insurance Can Help You Save Taxes

Introduction

In today’s times, when healthcare costs are skyrocketing, a medical procedure can take away a significant part of your savings in no time. Therefore, one of the best ways to deal with medical inflation is to cover yourself and your loved ones under health insurance. A health plan is one of the most important investments for your health. When you have health insurance handy, you can avail of quality and timely treatment and recover sooner. If you are worried about policy premiums, don’t be! Under Section 80D of the Income Tax Act, you can avail of tax deductions of up to INR 1 lakh on health insurance premiums every year. Let’s talk about this in detail.

Reasons to buy health insurance in India

A health insurance policy offers many benefits to policyholders and eases their worries during medical emergencies. The following are the reasons to buy health insurance in India —

1. Increasing healthcare costs: Thanks to medical inflation and advancements in technology, healthcare costs have increased throughout the country. You can opt for quality treatment only if you can shell out the expenses of a hefty medical bill from your pocket. However, if you have health insurance, you can opt for timely treatment without dipping into your savings.
2. Quality treatment: A health insurance policy covers your hospital bills and associated expenses, so you can choose the finest treatment without worrying about financial setbacks. This insurance product also covers home healthcare bills, organ donor expenses, daycare treatments, road ambulance charges, and more. Therefore, having adequate health insurance can help you save big during medical emergencies.
3. Cashless hospitalisation: When you have health insurance, you can choose any network hospital of your insurance provider for cashless treatment. This will save you from the hassles of paying the bills from your pocket and filing a reimbursement claim later. Also, you can choose the finest treatment even when you don’t have sufficient funds to pay the bills.
4. Add-on covers: Health insurance providers also offer add-on covers to policyholders for better financial protection. These include critical illness coverage, maternity coverage, room rent waiver, etc. For example, suppose you buy a critical illness add-on cover with your health plan. If you get diagnosed with a life-threatening condition covered under the policy, the insurer will give you a lump sum payout. You can use this amount for your treatment and other day-to-day expenses.
5. Affordability: Health insurance premiums are quite affordable when compared to the exorbitant hospital bills. By paying a nominal amount every year, you can keep your health plan active and use it to cover different medical expenses.
6. Tax benefits: Individuals can avail of tax benefits of up to INR 25,000 on health insurance premiums every year. If you are a senior citizen, you can enjoy a rebate of up to INR 50,000. Therefore, if you are a taxpayer in India, buying health insurance can help ease your tax liabilities.

How health insurance can help you save on taxes

If you have health insurance, here’s how you can save on taxes —

1. Health insurance for self and family: If you pay health insurance premiums for yourself and your family, you can claim tax deductions of up to INR 25,000 every year. Senior citizens can avail of tax benefits of up to INR 50,000 on their health insurance premiums. This tax benefit is available under Section 80D of the Income Tax Act, 1961.
2. Health insurance for parents: If you pay your premium of health insurance for parents, who are senior citizens, you can avail of additional tax deductions of up to INR 50,000 on the same.
3. Health insurance for self and parents: If you pay health insurance premiums for yourself, your family, and aged parents, you can claim deductions of up to INR 1 lakh every year.

For example, if you are less than 60 years old and your parents are senior citizens, you can claim tax deductions of up to INR 25,000 on your health insurance premiums and INR 50,000 on your parents’. This way, you can enjoy total deductions of up to INR 75,000 every year.

If you, your family and your parents are above 60, you can claim a tax rebate of up to INR 50,000 on your personal or family health insurance policy and INR 50,000 on your parents’ senior citizen’s health insurance policy. This way, the total deductions will add to INR 1 lakh every year.

4. Health insurance for HUF: HUFs or Hindu Undivided Families can claim the following tax benefits on health insurance premiums —

• If all HUF members covered under health insurance are below 60, one of the taxpayers can claim a maximum tax rebate of INR 25,000 annually.
• If one or more HUF members covered under health insurance are above 60, a taxpayer can claim a deduction of up to INR 50,000 every year.

5. Preventive health check-ups: Under Section 80D, you can also claim annual tax deductions of up to INR 5,000 on your preventive health check-up bills. However, the same is included in the maximum deduction of INR 25,000 on health insurance premiums for individuals and families and INR 50,000 for senior citizens.

Conclusion

In addition to covering your healthcare bills, health insurance can ease your tax liabilities. However, to claim tax deductions, make sure you pay health insurance premiums through your bank account, as cash payments are not eligible for deductions. If you are not covered under a health plan, it is wise to buy one at the earliest for better financial security during medical emergencies.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.