We Indians don’t like to talk much about insurance. Most Indians misconstrue insurance as an unnecessary expense and that is why you will not find them including insurance policies in their investment portfolio. Mounting health expenses has made it necessary to compare health insurance plans to meet exigencies and buy them accordingly. Though paying premiums of health insurance plans may seem like additional expenses, it does ensure monetary security and safety during emergency situations.
As Indians are more prone to paying only for those investments that help them to earn tax benefits or earn maximum returns, it would useful for them to understand how they can seek tax benefit in health insurance plans. The quantum of tax deduction has a lot to do with the age of the individual seeking health insurance. In addition, the Union Budget 2018 had proposed to raise the limit of deduction for senior citizens availing health insurance benefits. Those seeking tax benefits in health insurance plans while filing their Income Tax Returns must be aware of the following points:
●Anyone including individual or those belonging to the Hindu Undivided Family (HUF) can seek deduction, while calculation of income tax, on premiums paid for self, spouse, dependent children and parents under Section 80D of the Income Tax Act. As per regulations of the Income Tax Act, the maximum amount of deduction you can claim on the premiums paid to avail health insurance for self, spouse and children is Rs. 25,000. You may claim additional deduction if you have paid premiums for health insurance bought for parents. The amount of deduction increases to Rs. 50, 000 if parents are more than 60 years old, i.e., if they are senior citizens. This implies that the maximum amount of tax deduction on premiums paid for health insurance taken for the parents is equal to Rs. 100,000 (Rs. 50, 000 + Rs. 50, 000);
●For some reason, if your parents who are senior citizens are not eligible to buy health insurance policies, then you may claim deduction to the extent of Rs. 50,000 towards payment of their medical expenses;
●Renewal of health insurance plans means that the policyholders have to compare health insurance policies before paying for the one they wish to buy. Though the internet has made it easy to compare health insurance plans online, still many prefer to buy a multiyear health insurance plan to seek discounts available on the premium payable. In such a scenario, the benefit accruing from deduction will be spread over the tenure of the policy;
●You may also claim deductions up to Rs. 5000 for expenditure incurred on preventive health checkups subject to the condition that you have proper receipts to validate your claim. However, this deduction is not over and above the limits included under Section 80D;
●While you are claiming the deductions for the health insurance policies bought, remember that the premiums paid towards health insurance policies have to be paid in any mode other than cash. However, the amount towards payment of medical examination or preventive checkups may be paid in cash.
Also Read: Why is health insurance so necessary today?
The most appropriate health cover is the one that provides maximum coverage and additional benefits like lowest waiting period and paying for daily care needs in addition to covering hospitalization expenses. Most health insurance plans available these days not only cover expenses towards hospitalization, but also amount spent for OPD consultations, and hence, must look into details before paying for the same.