Tax on health insurance: Health insurance is a necessity now a days due to increasing health issues and also how we can forget about Covid. Many insurance companies offers various type of health insurance. various type of health insurance policies are:
| S.No | Types of Health Insurance Policies | Ideal for |
|---|---|---|
| 1 | Individual Health Insurance Plan | Single/individual person |
| 2 | Family Floater Health Insurance Plan | Family, including spouse, children, and parents |
| 3 | Senior Citizen Health Insurance Plan | People above 65 years of age |
| 4 | Critical Illness Insurance Plan | Financial protection against expensive treatment for critical illness |
| 5 | Group Health Insurance Plan | Group of people, such as a company’s employees |
| 6 | Top-up Health Insurance Plan | Those looking for additional medical coverage up to a certain amount |
| 7 | Personal Accident Cover | Those looking to insure partial/total disability and death due to an accident |
| 8 | Maternity Health Insurance Plan | Covering expenses incurred in the prenatal stage, delivery and post-natal stage |
| 9 | Mediclaim Insurance Plan | In-patient expenses |
| 10 | Disease-specific (Corona Kavach, etc.) | Those looking to cover pandemic-specific health conditions |
Tax benefit of Health Insurance
Under Section 80D of the Income Tax Act, taxpayers get tax exemption on the premium paid for health insurance. The exemption is from Rs 25,000 up to Rs 1 lakh in a financial year. Tax deduction can be claimed by the taxpayer who has paid a health insurance premium of Rs 25,000 in a year and is less than 60 years of age.
On the other hand, if the taxpayer is paying the premium for the health insurance of his parents and is below the age of 60 years, then he gets an additional exemption of Rs 25,000.
Read Also: Life insurance policy proceeds over Rs 5 lakh to be taxable: New rule
If taxpayers’ parents are senior citizens and the taxpayer is paying the premium for their health insurance, then they can get a deduction in income tax of Rs 50,000. However, the taxpayer and their parents should have to buy separate health insurance.
On the other hand, if the taxpayer is a senior citizen, then the exemption of Rs 25,000 can reach up to Rs 1 lakh.
Please note that ‘family’ under this section includes only the spouse and dependent children.
Read Also: Save Tax: 10 Income Tax planning Tips for FY 2022-23
Tax Benefits for Multi-year Insurance Policy
In a multi-year medical insurance plan, the amount of premium remains the same throughout the policy period. Hence, you can protect yourself from a potential increase in premiums during renewals. As for the tax exemption for the multi-year plan, you can claim it every year.
For example: if you have paid Rs. 45,000 for a three-year long-term health insurance plan, you can claim tax exemptions of Rs. 15,000 for each year.
Preventive Health Check-Up Expenditure
It is like a regular health check-up conducted once or twice every year by your physician or general practitioner. The government introduced deduction under preventive health checkup to encourage people more towards protection of their health. The cumulative amount of deduction for this check-up is maximum Rs. 5,000. Even cash payment for this expenditure is eligible for section 80D deduction.
Read also: GST on Insurance Premium : Rate and Input Tax Credit on LIC, Health, Vehicle Insurance
Tips to check before you finalize your Health Insurance Plan
There are many health insurance companies in the market, choosing one health insurance plan according to your needs can be tough task. But here is a quick checklist to consider before you finalize your insurance product:
- Be sure of the Sum Insured chosen. Think about whether it will be sufficient for you or your family members.
- Set the right Sum Insured limit for your dependent parents.
- Choose the plan with the minimum waiting period.
- Check for the maximum age-renewal.
- Buy health insurance policy from the companies that have a fast claim settlement ratio.
- Choose the insurance company that has the widest network of the hospital on their list.
Health Insurance Premium – mode of payment
Following are the ways you can pay for the premium of the medical insurance plan. Please note, cash payments will not be eligible for tax benefits.
- Online – Net Banking (Debit/Credit)
- Cheque
- Cash
- Demand Draft
Read Also: 10 Income Tax changes from 1st April, you must know
Difference between sections 80D, 80DD, 80DDB and 80U
| Particulars | 80D | 80DD | 80DDB | 80U |
| Purpose | Medical Insurance & Medical expenditure | Medical treatment of a disabled dependent | Medical Treatment of Self/ Dependant for specified diseases | Medical treatment of disabled assessee (self) |
| Maximum Limit | 1,00,000 | 75,000(non-severe disability) 1,25,000(severe disability) | 40,000(age < 60), 1,00,000 (age 60 or above) or amount spent whichever is less | 75,000(non-severe disability) 1,25,000(severe disability) |
| Type of assessee | Individual/ HUF | Resident Individual/ HUF | Resident Individual/ HUF | Resident Individual |
Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.
Also, www.babatax.com and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.
For Collaborating with us-
- Mail us at [email protected]
- Whatsapp us at +91-7024984925
