Radhika MundraHealth insurance covers the expenses incurred in your medical treatments. You can cover your and your family’s medical expenses upon availing of this insurance. Health insurance also offers tax benefits under Section 80D of the Income Tax Act.
Scroll down to know the best ways to save tax through your health insurance plan.
Also read: 5 Ways To Save Tax With Health Insurance In India
Ways to Save Tax by Availing of Health Insurance Policy
Here are the top 7 ways to save tax with health insurance policies:
Buy Health Insurance Policies for Your Parents
As per Section 80D of the IT Act of 1961, you can save on tax by paying your parents the premium for health insurance policies. You can also be exempt from tax liability for the expenses incurred in medical treatment of senior citizens over 80, even if the senior citizen is not covered under health insurance.
You can also deduct up to Rs. 50,000 annually for either of your parents. However, you must ensure that your parents are over 60.
Opt for Preventive Health Checkups
You can claim a tax deduction of up to Rs. 5,000 annually on preventive health checkups for individuals of or below 60 years old. The deduction limit can be up to Rs. 7,000 for policyholders above 60 years old. As per Section 80D of the Income Tax Act, individuals can claim a tax deduction of up to Rs. 35,000 for the expenses incurred due to the preventive health checkup and medical treatment of senior citizen parents.
You can claim this Preventive Health Checkup allowance upon meeting the mentioned income tax deduction limits.
Pay Your Premium in Non-Cash Mode
You can avail of tax benefits by paying health insurance premiums through cheque, net banking, debit card, specific banking modes, etc. On the other hand, you can claim tax benefits against preventive health checkups by paying the premium in cash.
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Opt for a Family Floater Plan
You can claim tax deductions in a specific financial year against the premiums paid for the family floater health insurance plan. A family floater plan covers your spouse and children along with you. As per the Income Tax Act, you can be exempt from tax liability for the following family members under a health insurance plan:
- Children
- Spouse
- Policyholder
- Dependent ParentsAny Hindu Undivided Family can claim health insurance tax benefits under Section 80D of the Income Tax Act, depending on the premium amount and coverage.
Avail Tax Deduction Under Section 17 on Medical Allowance
You can claim a tax deduction of up to Rs. 15,000 annually for the medical allowance your employer pays you and your family. This allowance covers your siblings, spouse, dependent parents, and children.
Avail Tax Benefits for Treatment of Critical Illness
Health insurance policies protect you and your family against critical diseases and reduce your tax liability. You can claim deductions up to Rs. 80,000 for seniors above 80, Rs.60,000 for seniors above 60, and Rs. 40,000 for others against expenses of critical illness treatment.
Such diseases include chronic renal failure, cardiac disease, cancer, etc. As per Rule 11D, some specific diseases are eligible for tax deduction. You can claim this exemption for your spouse, children, yourself, parents, and siblings upon providing the relevant certificate from the doctor.
Save Tax on the Treatment of a Person with Disability
As per Section 80DD, if your health insurance covers a disabled person, you can avail of tax exemptions of up to Rs. 75,000 annually. However, the disabled person you are taking care of should be your children, parents, siblings, or spouse.
You can claim a maximum deduction of Rs. 1.25 lakhs against the expenses incurred for maintaining the disabled person, rehabilitation, medical treatment, etc.
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What are the Documents Required to Claim Tax Deductions under Health Insurance Plan?
When claiming tax deductions against the health insurance policy, you must provide a copy of the insurance policy and premium payment receipt to the insurance provider. These documents declare your family member’s name, age, and relationship.
You may also need to provide an 80D certificate while claiming tax exemptions against your parent’s health insurance policy premium.
Thus, health insurance policies are ideal protection for your and your family members’ health and also a means of savings. You can reduce tax liability on the premium paid for health insurance and save a decent amount every financial year.
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