How to Save Taxes on Health Insurance
Last updated on June 11th, 2018
If you are planning for your tax saving, then a good option would be to invest in Health Insurance. Not only does it reduces your taxable income but also, provides you protection against the rising medical expenses.
How much deduction can you claim for premium payment?
If you are a senior citizen (age 60 + years) and pay health insurance premiums, then you can claim deduction under section 80D, up to Rs.50,000.00. However, if you are below 60 years of age, the maximum deduction allowed is up to Rs.25,000.00. It needs to be noted that premiums that you pay for your health insurance policy, for your spouse, your children or your parents, all qualify for such deductions. Additionally, even if you are below 60 years age, but pay health insurance premiums for your parents who are senior citizens, then you can claim a deduction up to Rs.50,000.00 for their policies.
Hence, as a taxpayer aged below 60 years, you can claim deduction up to Rs.75,000.00 in a total of which Rs.25,000.00 will be for your own, spouse’s or, child’s policy and an additional amount of Rs.50,000.00 for your senior parents. Similarly, if you are a taxpayer aged above 60 years, then you can claim deduction up to Rs.100,000.00.
In the financial year 2018-19, it has been proposed that even if you take a single premium policy of say Rs.50,000.00 covering you for two years, then you would be able to claim a deduction of taxes for Rs.20,000.00 proportionately for this year and the next.
Deductions for health check-ups
If you undergo a preventive health check-up, then you can claim a deduction under section 80D up to Rs.5,000.00. This is, however, included in the maximum deduction limit of Rs.25,000.00 if you are below 60 years and Rs.50,000.00 if you are above 60 years. For example, consider yourself as a senior citizen paying Rs.45,000.00 as a premium for your health insurance policy. You also underwent a preventive health check-up worth Rs.5,000.00. Then, you can claim in total Rs.50,000.00 under section 80D.
Are all types of health insurance eligible for deduction?
You can claim deductions, not only for yourself but also for your family floaters. Additionally, cash plans for daily hospitalization and plans covering critical illnesses are also eligible for the deductions. It may be noted that if you take a critical illness rider with your life insurance policy, the premium amount for the rider is eligible for deduction under section 80D.
Are all modes of payment eligible for deduction?
You can claim a tax deduction for premium payment in any mode like demand draft, cheque, internet banking and credit card, other than cash. However, please note that cash payment done for your preventive health check-up is eligible for tax deduction.
While buying a health insurance plan you are suggested to acquire all the information needed regarding the features of the policy. Also, ensure to plan your investments as per the eligibility limits for deduction under section 80D according to the tax laws applicable for the respective financial year.