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Tax Benefits of Health Insurance Plans in India | Max Bupa
25 November 2020
Health insurance plans should be one of the first financial instruments you invest in, since they are the best ‘guarantee’ to secure your savings in the long term. The benefits of health insurance plans are wide-ranging and they enable you to remain financially secure, even when you are faced with unexpected medical emergencies.
Rising hospital expenses in line with inflation and specialisation of medical treatments has made buying health insurance policy a more imminent necessity than ever before. The importance of health insurance is visible whenever you or any member of your family is unwell or in need of medical aid. While many different kinds of health insurance plans are available easily, it is important to first decide whether you want to opt for an individual health insurance plan for yourself or avail a family health insurance plan, which will also enable you to protect your family.
While there is no right age to buy health insurance, it is something that you should ideally opt for as soon as you have a regular source of income flowing in. There is no way to predict a medical emergency, so it is best to be prepared by starting to pay health insurance premiums from an early age and ensure you are adequately covered in case an emergency crops up.
Tax Benefits of Medical Insurance Policy:
Even as you compare health insurance plans and try to pick out the best one for yourself, it is important to first narrow down on the benefits you are looking for. The tax benefits of health insurance are substantial and available to everybody, thereby ensuring that you can avail them to get monetary relief as well.
The tax benefits of medical insurance are wide-ranging and enable you to save a significant amount, even as you reap the benefits of seeking emergency medical attention. Read on to learn about the different ways in which you can seek tax relief while opting for medical insurance, and the different Indian laws which enable you to do so.
Income Tax Section Pertaining to Health Insurance Tax Benefits-
1. Section 80D :
Premiums that are paid towards your health insurance policy are deductible under this Section of the Income-Tax Act, 1961. This is applicable even on premiums that you pay on critical illnesses. However, the benefits differ slightly on whether you are paying the premiums towards health insurance for yourself, your spouse, your children or your parents. For yourself, your spouse and your children, you can claim deductions of up to Rs. 25,000 annually. In case you or your spouse are a senior citizen, the deduction will actually increase to Rs. 50,000.
Even when you are paying premiums on health insurance for your parents, you are eligible for deductions of up to Rs. 25,000 in a financial year. If they are senior citizens, the deductions are further increased to Rs. 50,000 in a year.
2. Section 80DD :
In case you are paying premiums on a health insurance policy for a dependent, who is disabled, you can claim health insurance tax benefits of up to Rs. 75,000. If your dependent is suffering from extreme disability, you are eligible to claims for up to Rs. 1.25 lakh.
3. Section 80DDB :
This Section pertains to diseases that are covered under Rule 11D of the Income-Tax Act, 1961. For these specified diseases, deductions of up to Rs. 40,000 can be claimed for the medical expenses being incurred for treatment of these diseases. This will include expenses incurred for diagnosis, treatment, nursing and even medication. If you are claiming deductions under this section for a senior citizen, you can even claim deductions of up to Rs. 1 lakh.
However, even as you seek to avail the tax benefits of health insurance, it is important for you to remember that most taxation benefits are available only through non-cash payment of health insurance premiums. Health insurance tax benefits can however be availed by you if you make the payment through online modes or through cheques or debit and credit cards.