Tax benefits to be availed on health insurance- A brief guide

Posted by amrina alshaikh on February 25th, 2020

If you are going to set your financial goals then you must include Health Insurance policy in the list. Experts say that the first step which we should always take to start planning our financial year is to buy a health insurance policy. Health policies cover expenses for medical treatments. You will just have to pay a small amount of money for the premiums to get sizable coverage in return. A health insurance policy is not just a Mediclaim Insurance but it also a very good tax-saving tool.

The premium you pay for health insurance is eligible to get tax benefits under section 80D of the Income Tax Act, 1961. You will be able to save tax if you pay premiums even for your family members and the most important thing is that it doesn't matter if your parents or children are dependent on you or not. You will be able to save taxes up to Rs. 25,000 in a financial year if you are not above 60 years of age.

You will be able to save taxes up to Rs. 75,000 if you and parents both have a Mediclaim Insurance policy. Because under section 80D, if the policyholder is above 60 years then the maximum tax benefit is Rs. 50,000 and if the policyholder is not above 60 years of age, then the maximum tax benefit is Rs. 25,000. So, if your age is above 60 and you are paying premiums for your parents, then the maximum tax benefit is Rs. 1,00,000.

If you are paying a premium of Rs. 20,000 and you are going for a health check-up which is worth Rs. 5,000, then you will be able to save taxes up to Rs. 25,000 under section 80D. If you pay premiums in hard cash then you will not be eligible for tax benefits under section 80D. You will have to pay the premiums by cheque, credit card, drafts or internet banking.

Apart from saving taxes, a Health Insurance policy has other benefits. If you buy a health insurance policy then you will not have to pay money from your pocket for your treatment. There are many companies in India which offer policies with coverage like ambulance charges, OPD charges, pre-hospitalization charges, post-hospitalization charges, medical bills and others. A health insurance policy is not only a good tax-saving tool but also a smart way to invest money for your health. You will be able to live a tension free life because you will not have to worry about the money that you may require for future treatment.

If you don't want to buy a health insurance policy because of the premiums then think once again. The premium is a very small amount which you will have to pay to get sizable coverage in turn. If something serious happens to you and you have to undergo hospitalization and serious medical treatment, not having a health insurance policy will lead to a wipe-out of all your savings.