A potential health insurance plan enables you to acquire two benefits at one price. Basically, they provide you with much-needed financial security along with a plethora of coverage benefits. Besides, they also provide you with potential income tax benefits on the premium amount you pay.
Please note that the tax benefits are not just applicable to the policy purchased for yourself. It remains equally applicable to the policies purchased for your spouse, dependent children, parents, etc.
If you have been dealing with a health insurance plan, then you’ll know that there are quite a few potential tax benefits. Apart from them are a few other lesser-known health insurance tax benefits. If you aren’t aware of them, it could automatically disqualify your chances for availing of the tax benefits.
So today, this article is here to provide some informative insights into the tax benefits of the mediclaim policy. Keep reading until the end of the article to know more about it. Let’s dive in.
Tax Benefits of Health Insurance – What are They?
Believe it or not, health insurance is regarded as one of the primary investments for any person. This basically ensures financial security during medical emergencies for the insured.
However, the benefits associated with health insurance policy don’t just stop here. It also offers attractive and potential tax benefits. And plenty of people consider investing in health insurance policies for these tax benefits.
But is health insurance tax deductible?
Well, it certainly is! A health insurance plan provides remarkable tax benefits on the premium amount paid by the insured. So, under Section 80D of the Indian Income Tax Act, your health insurance premium is tax deductible.
Thus, the amount you pay as a premium for your mediclaim policy coverage can be deducted from your taxable income. This will automatically make the applicable taxes on your taxable income go down. However, you should note that the tax benefits are subject to changes in Income Tax laws.
Lesser-Known Tax Benefits on Health Insurance
Here is a comprehensive listing of some of the lesser-known tax benefits on health insurance:
Preventive Health Check-Ups
Please remember that preventive health check-ups are a great way to keep track of your health. Apart from that, it’s also a remarkable way to avail of tax benefits. With a health insurance policy, you can acquire a benefit of up to Rs. 5000 for preventive health check-ups.
For instance, the premium amount of your health insurance plan is Rs. 20,000. And for some additional health check-ups, you end up spending around Rs. 5000. So, if this is the case, you can automatically avail of a tax deduction of Rs. 25,000.
Coverage for Parents
When you purchase a mediclaim policy for your parents, you can efficiently avail of tax benefits on the premiums paid. However, the amount of tax benefits will entirely depend on the age of the insured. And whether your progenitors or parents are dependent on you or not is not taken into consideration.
But, if none of the insured people is 60 years or above, you can get tax exemptions. And this tax rebate will not be more than Rs. 25,000 per year.
But if your parents are senior citizens and you are below 60, your tax rebate will amount to Rs. 55,000. And if you and both your parents are above 60 years, then the tax deduction stands at Rs. 60,000.
Health Insurance Add-Ons
You will probably know that you need to pay an extra premium for add-ons such as super top-ups, critical illness plans, etc. However, you also stand the chance of availing tax benefits on these riders. This means you will be exempted from taxes apart from acquiring added protection from medical expenses.
Please note that tax benefits can be availed on both fixed and indemnity health insurance plans. A fixed health insurance plan will pay a lump sum to the policyholder regardless of medical expenses. And once the payout is complete, the policy automatically terminates.
On the other hand, an indemnity health insurance plan pays for all your hospitalisation expenses up to the sum insured. And this typically includes the pre and post-hospitalisation charges. Nevertheless, these policies are applicable for critical illness plans and offer daily hospital cash allowance.
You’d be surprised to know that the mode of payment also plays a prominent role in your health insurance tax deductions. So when you pay your health insurance premium in cash, you lose the opportunity for a tax deduction. If you wish to avail of tax benefits, you must adhere to digital payments.
This means you are required to use a credit/debit card, net banking, draft, cheque, etc. Nevertheless, cash payments made particularly for preventive health check-ups are eligible for a tax deduction.
By now, you must have a clear idea that health insurance can help you gain potential tax benefits. In fact, you can acquire tax benefits on the premiums paid towards your health insurance under Section 80D. Considering the health insurance tax benefits, we can rightfully state that it’s a potential tool for making the right future investment.
In Future Generali, you will find some of the best health insurance in India. So, if you have any queries and require expert advice, feel free to reach out to them. We’re certain they will be able to solve all your issues and provide appropriate answers to your queries.