What You Need to Know About Tax Benefits and Health Insurance

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Do you have a concrete health insurance plan to deal with medical expenses during times of need? Did you know that the Indian constitution lets you avail different tax benefits from your health insurance policy? Both salaried and self-employed individuals are eligible for claiming tax benefits on health insurance. Learn all about it in this article.

Income Tax Exemption on Health Insurance

According to Section 80D, the health insurancepremium is not considered taxable income. The maximum deductible amount is Rs 25,000. For senior citizens, the maximum taxable amount can reach up to Rs 50,000.

So, a health insurance policyholder can enjoy exemptions of up to Rs 75,000 from their taxable income. When the age of the proposer, as well as their parents, is above 60, the deductible can go as high as Rs 1,00,000.

Different Scenarios and Relevant Tax Deductions on Health Insurance

Scenario Deductibles Total Deductions
You and your parents are under 60 years ●        Up to Rs 25,000 claims available for self, family, and children

●        Additionally, Rs 25,000 claims are available against the premiums paid for parents

Rs 50,000
You are under 60 years but your parents are senior citizens ●        Up to Rs 25,000 claims against the premium paid for self, children, and family

●        Additionally, Rs 50,000 is available for premium paid for parents

Rs 75,000
For you, your family, and senior citizen parents ●        Up to Rs 50,000 claims against the premium for self, children, and family

●        Additionally, a claim of up to Rs 50,000 is available against premium paid for parents

Rs 1,00,000
Hindu Undivided Family (HUF) ●        Up to Rs 25,000 for premium paid for self, children, and family

●        Up to Rs 25,000 for parents when they are senior citizens

Rs 25,000 as tax benefits for parents when they are above 60 years
NRIs ●        Up to Rs 25,000 for premiums paid for self, children, and family

●        Premium paid for parents is excluded from taxable income only when they are senior citizens

Rs 25,000

Health Insurance Tax Benefits for Senior Citizens

The tax exemptions on a health insurance plan available for senior citizens above 60 years but below 80 years are as follows:

  • Claim deduction of up to Rs 50,000 available on annual health insurance premium
  • Rs 1 lakh for the treatment of certain critical illnesses
  • A tax deduction of Rs 50,000 is available when an aged father lacks health insurance and the mother is also a senior citizen.

Tax Deductions on Preventive Health Check-Ups

You can also enjoy health insurance tax deductions on preventive check-ups. If your parents are 60 years or below, you get a tax deduction of up to Rs 5,000 on preventive health check-ups. When they are older than 60 years, the upper limit goes up to Rs 7000 for preventive check-ups under your health insurance plan.

Tax Benefits Available on a Multi-Year Health Insurance Policy

People investing in a multi-year health insurance plan can get premium discounts and tax benefits. The tax benefits are available in a proportionate manner over the years for which the policy has been bought. For instance, you can get a tax benefit of Rs 15,000 when you have paid a premium of Rs 45,000 for three years. Your insurer gives a certificate mentioning the amount already claimed by you.

Documents Required to Claim Tax Benefits on Health Insurance

You will have to submit certain documents when you are claiming an income deduction on your health insurance policy. The required documents are as follows:

  • Premium payment receipt
  • A copy of your insurance plan with the names of your family members, their ages, and their relationship with you

If you are paying insurance premiums for your parents, get the 80D certificate from your insurance provider. To collect that certificate, you will have to provide proof of payment details in your name.

What are the Tax Saving Exclusions on Health Insurance Policies?

If you want to enjoy tax benefits on your health insurance policy, the premium that you pay should adhere to the terms and conditions under Section 80D. You won’t be able to enjoy any tax deductions on your health insurance plan under the following conditions:

  • You haven’t paid the premium of your health insurance within the financial year.
  • You haven’t paid the health insurance premium in cash.
  • You don’t have the receipt of the premium with you.
  • You can’t claim the deduction if someone else has paid the premium on your behalf. Therefore, health insurance must be paid from the taxable income of the person willing to claim the deductions.
  • You have paid the premium for the health insurance policy of siblings, friends, in-laws, or others.
  • You have claimed deductions that are not as per the limits under Section 80D.
  • The maximum deduction amount is according to the limitations specified in Section 80D. Even if you have paid more, you won’t get more deductions than specified under the Act.

You should always renew your health insurance policy on time to enjoy the tax benefits. You should also keep the proof of payment safe with you to show while claiming the deductions.

Parting Words

Are you yet to invest in a health insurance policy? If not for anything, buy one for health insurance tax benefits. Future Generali is your ultimate destination to get a comprehensive health care insurance package according to your requirements. So, invest in your health insurance plan today!

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