You would be familiar with health insurance tax benefits if you have worked for several years. However, there might be numerous lesser-known tax advantages of health insurance. Not knowing this could prevent you from claiming additional tax benefits on your policy.
If you are considering buying health insurance online for the first time, continue reading to learn more about tax deductions on your health insurance premiums.
Tax benefits of health insurance
Health insurance is one of the most important investments a person can make to protect themselves and their family during medical emergencies; in addition to providing substantial savings on medical expenses, health insurance plans also offer attractive tax benefits. Many individuals invest in life and health insurance for tax advantages. Consequently, can health insurance be tax deductible?
Yes, indeed! Health insurance premiums can be eligible for tax deductions. Section 80D of the Indian Income Tax Act allows you to deduct a certain amount of tax against your health insurance premiums. Therefore, you can remove your health insurance premium from your taxable income (subject to certain limits). This reduces your taxable income and, consequently, your tax liability. Please note tax benefit is subject to change in prevailing tax laws. * Standard T&C Apply
Let us examine these tax benefits of health insurance in depth.
Tax advantages in health insurance via section 80D of the Income Tax Act
A health insurance policy is a prudent choice regardless of age. It is a cost-effective way to protect yourself and your family from unexpected medical expenses. Various health insurance policies are available depending on your specific needs, individual mediclaim, or health insurance plans for your family.
Section 80D of the Income Tax Act allows for deducting health insurance premiums. The medical insurance premium deduction can be available for self, family, and dependent parents. The maximum annual deduction for dividends paid for self (if senior citizen) plus premiums paid for separate health insurance for parents (if senior citizen) could be INR 1,00,000.
As the health insurance tax deduction would be quite substantial, it can reduce the tax outflow during the fiscal year in which taxes get calculated. Please note that tax benefit is subject to change in tax laws. * Standard T&C Apply
Premiums paid for critical illness coverage, and riders
It is essential to note that all insurance add-ons or “riders” purchased with your existing policy and necessary illness coverage can also be claimed as part of your overall tax benefit for health insurance.
Let’s examine how much you can deduct from your income tax for health insurance:
The maximum medical deduction is dependent on the age of the primary policyholder. You may claim a health insurance income tax deduction for an individual/family floater policy purchased for you and your spouse and children and a separate health insurance online policy purchased for dependent parents for which you are paying the premiums.
- For policyholders younger than age 60, the maximum deductible for medical expenses is INR 25,000.
- The maximum mediclaim deduction limit for policyholders older than 60 (senior citizens) is INR 50,000.
- Hindu Undivided Family (HUF) can claim a maximum deduction of INR 25,000 (if the Karta is younger than 60) and INR 50,000 (if the Karta is a senior citizen).
- Non-Resident Indians (NRIs) can claim a maximum deduction of INR 25,000 if they purchase a health insurance policy in India for themselves or their parents, regardless of age.
- The Preventive Health Checkup (PHC) allowance is only available if the mediclaim above deduction limits is unmet. The PHC limit for policyholders under 60 is INR 5,000, while the limit for senior citizens is INR 7,000.
* Standard T&C Apply
Tax advantages for multi-year health insurance policies
The deduction is calculated proportionally over the policy term, and the insurer issues a certificate detailing the amount you’ve already claimed.
So, to wrap up, we recommend you look at options for health insurance online to save on tax while enjoying other health insurance benefits. Please note that tax benefit is subject to change in tax laws.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.