How Can You Save Taxes with Your Medical Bills?
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How Can You Save Taxes with Your Medical Bills?
Posted On : 11 March 2021, 6 Months Ago. Health-Insurance
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With the increasing incidences of health problems, medical expenses have been ever rising. To cut down on medical expenses, it is recommended to save your receipts and invoice of bills to submit for tax claims in cases of hospitalization of yourself or any dependent. It is advisable to purchase a health insurance plan be it an individual health insurance plan or a family health insurance plan. Besides, there’s a clause available in the IT Tax through which you can save tax on the money you spend on health insurance for yourself and your parents. The benefits of health insurance are numerous and definitely rewarding. Besides, the process of beginning with a policy is inexpensive as the premium to be paid for Max Bupa’s health insurance plans is nominal.

Before buying a health insurance plan, it is necessary to choose the right health insurance in order to claim your tax benefits.

 

Are Medical Expenses Deductible?

 

The emphasis on how to save tax on medical expenses has been increasing by the day. The immediate question that arises is- how many medical expenses are deductible. For any medical expense that is more than 7.5% of the gross income, taxpayers are eligible to deduct tax on medical bills. Nonetheless, not all medical expenses are deductible. Although medical bills are a tax write-off, tax-saving health insurance is only applicable to certain medical expenses.

 

What Medical Expenses are Tax-Deductible?

 

Contrary to the popular belief, certain medical expenses are tax-deductible. You can make claims on your medical bills for a tax deduction. In addition to medical expenses, hospital bills are also tax-deductible.

 

Here is a list of which medical bills are tax-deductible:

 

1. Hospital and nursing home care

2. Acupuncture

3. Eyeglass, contacts, crutches, hearing aids, dentures, and wheelchairs

4. Insulin and prescription drugs

5. Payments made to doctors, psychiatrists, surgeons, and other healthcare practitioners

6. Transportation costs incurred during medicare

7. Weight-loss programs for diseases and illnesses

8. Health insurance premiums for long-term care or medical care

 

Exemption of Medical Expenses

 

 

In accordance with Section 80D of the Income Tax Act of 1961, every individual who purchases a mediclaim policy for coverage of medical tests, treatment, and hospitalization expenses, can exempt themselves from tax.

 

It’s important to stay aware of the following factor to claim tax exemption for the mediclaim policy -

 

1. Regular Expenses

 

Buying a health insurance plan can help you avail a tax exemption up to a maximum of Rs. 15,000 according to section 10A of the Income Tax Act of 1961.

 

2. Precautionary Medical Checkups

 

With an existing health insurance plan, you will be eligible for tax benefits of Rs. 5,000 for precautionary medical checkups under section 80D of the Income Tax Act of 1961.

 

3. Specially Challenged Dependents

 

For dependents who are especially challenged, section 80D of the Income Tax Act of 1961 exempts an amount between Rs. 50,000 and Rs. 1 lakh of tax on medical expenses.

 

4. Dependents with Specified Diseases

 

A tax exemption between Rs. 40,000 and Rs. 80,000 can be availed by dependents who have specified diseases such as Thalassemia, AIDS, Neurological syndromes, Kidney Diseases, or Cancer, according to section 80DDB of the Income Tax Act of 1961.

 

Exceptions for Deductible Medical Expenses

 

While several medical expenses are tax-deductible, certain exemptions come along. The following expenses are non-deductible:

 

1. Most of the cosmetic surgeries

2. Vacations

3. Over-the-counter medication

4. Burial expenses

5. Nicotine gum

6. Toiletries and cosmetics

 

 

The Process to Claim Medical Expenses

 

The most prominent question amongst many is how to claim medical expenses. In order to claim medical and hospitalization expenses, follow the below 2 steps:

 

1. Itemize your Taxes

 

To begin with, you will be required to itemize your taxes instead of considering the standard deduction. This would require more time to be spent on tax prep. If itemizing your taxes helps save more than the standard deduction, move ahead with itemized deductions. If not, use the standard deduction.

 

2. Schedule A

 

In order to help you do the math for a tax deduction, Schedule A of IRS form 1040 can be helpful.

 

3. Maintain a Record of Invoices

 

Finally, it is very important to maintain a record and copy of all of your medical expense bills and invoices to ensure a timely claim process for your health insurance.

 

Conclusion:

 

To sum up, it is the smartest choice to purchase a health insurance plan so that you can reduce costs and save taxes on different kinds of medical expenses. It is also essential to keep in mind to choose the right kind of tax-saving health insurance plan so that your unique needs are met.

 

 

Sources:

 

https://www.nerdwallet.com/blog/taxes/how-does-medical-expenses-tax-deduction-work/

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