Investment in health insurance is essential. It offers financial protection to you and your loved ones, in the event of a medical emergency. Health insurance not only pays the expenses of your (planned or unexpected) hospitalisation but health insurance premium also gets tax deductible U/S 80D.
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Is health insurance tax deductible?
When it comes to tax preparation and personal finance, Section 80D plays a significant role because it permits you to deduct expenses related to maintaining your health and health insurance.
The health insurance premium is eligible for tax deduction under section 80D.
Thus, buying health insurance is a wise decision because it settles for your medical expenses and offers tax deductions.
Additional Reading
How To Decide Health Insurance Cover Amount?
Health Insurance-Which Is Better Family Floater Or Individual
How To Increase Health Cover Cost Effective Way
Health Insurance Tax Exemption Limit
You are eligible for tax advantages under section 80 D for the premium paid for self or family floater policies that cover your partner, kids, and dependent parents.
If you and your family members are less than age 60, you get tax deduction U/S 80D for upto Rs 25000 but if your age is above 60 you get exemption upto 50K in a financial year.
Let’s understand with example
Mr. Anand Age is 25 ( less than 60), his wife age 24 years, kids age 3 year and 1 year. He can get tax deduction U/S 80D for up to Rs. 25000. Now suppose he also pays premium for his parents ( less than 60 years) also, then he can claim additional tax deduction of Rs 25000. Thus in total, he gets deduction of Rs. 50K.
Mr. Joy Age is 25 ( less than 60), his wife age 24 years, kids age 3 year and 1 year. He can get tax deduction U/S 80D for up to Rs. 25000. Now suppose he also pays premium for his parents ( more than 60)also, then he can claim additional tax deduction of Rs 50000. Thus in total, he gets deduction of Rs. 75K.
Mr. Sushil Age is 62 ( less than 60), his wife age 58 years, kids age 20 year and 22 year. He can get tax deduction U/S 80D for up to Rs. 50000. Now suppose he also pays premium for his parents ( more than 60)also, then he can claim additional tax deduction of Rs 50000. Thus in total, he gets deduction of Rs. 1 lac.
If you opt for preventative health care than additional deduction of Rs 5000 is permissible for all above stated options.
Important Points to ponder before purchasing health insurance
- Tax exemptions only apply to the cost of health insurance and thus does not apply to other fees like GST or service costs.
- According to income tax section 80D, payments made in cash for health insurance are not exempt from paying taxes.
- Tax exemption is available for all additional payment methods, including demand draughts, checks, net banking, debit cards, and credit cards.
- In case of multi-year health insurance policy, the deduction is computed proportionately throughout the course of the insurance. To imply this, the insurer (insurance company) issues a certificate indicating the amount you have previously claimed. Thus you get tax deduction U/S 80 D multi year policy also.
- The expenses covered under the policy – pre and post hospitalisation, room rent, ambulance charges, alternative medicines and so on.
- Availability of riders and top-up premiums or plans.
- Minimum and maximum age of entry.
Factors to consider before purchasing health insurance
- The claim settlement ratio of the health insurance provider and the ease of the claim settlement process.
- List of illnesses, procedures and medical conditions covered under the policy.
- Waiting periods for the illnesses as prescribed under policies.
- The network of cashless hospitals covered by the insurer and whether your preferred medical facilities are covered.
- Exclusions – the disease for which cover is not available.
- Co- payment option, where you have to pay along with insurance company.
- Any kind of sub limits such as room rent capping, ICU rent capping etc.
- Additional features– you should pay attention to additional features.
FAQ
Is 80D included in 1.5 lakh?
No, 80D is not included in 1.5 lakh. Rs 1.5 lakh deduction comes U/S 80C which is separate a separate section altogether.
What is the limit for 80D in income tax?
For the people below age 60, one gets tax deduction up to Rs 25K. If you are above 60, then the deduction amount is 50K.
If you also pay for your parents then you get additional deduction for the premium paid. The limit for parents below 60 is 25 K and for parents above 60 years, the limit is up to 50K.
How To Decide Health Insurance Cover Amount?
Does health insurance comes in 80C or 80D?
Health insurance tax deduction comes U/S 80D. One can claim deduction for Rs.50K to 1lac in total.
What is health insurance tax benefit for parents?
One can get additional tax deduction U/S 80D for the premium paid for parents. If parents age is below 60 then one get additional deduction up to 25000. But if the parent’s age is above 60, then one is eligible for tax deduction up to 50000 for them.
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