The rise in the number of various lifestyle diseases, along with the inflating prices of healthcare, has made it imperative that you secure your and your family's health. Apart from adopting a healthy lifestyle, availing a Health Insurance policy is a recommended way to do so. A Health Insurance policy acts as an umbrella cover for your financial needs in a medical emergency.
Along with taking care of your medical expenses, a Health Insurance policy also helps you save taxes. Let's discuss the tax provisions in detail in this article.
The premium amount paid towards the Health Insurance of you and your family, including your parents, can be claimed as a tax deduction from your taxable income under Section 80D of the Income Tax Act, 1961. However, the maximum deduction amount you can claim is based on your age.
Your maximum deduction limit, including your spouse and children, is ₹25,000. You can claim an additional deduction of up to ₹25,000 for your parents if they are below 60.
Example: Rohit is 30 years old and pays a premium of ₹20,000 on his Health Insurance policy and ₹10,000 for the Health Insurance premium of his spouse. Moreover, he also pays a premium for a Medical Insurance policy of ₹35,000 for his father, who is 55 years of age.
In such case, the maximum deduction Rohit can claim under section 80D is:
Although Rohit paid ₹65,000 towards insurance premiums, he can only avail a deduction of ₹50,000, which is the permissible tax benefit.
Taxable income calculation
If your parents are above 60 years of age, the exemption limit you can avail for them is ₹50,000, along with your deduction limit of ₹25,000.
Example: Vivek is 50 years old and pays a premium of ₹22,000 for a Health Insurance policy. He also pays a premium for the medical insurance policy of ₹45,000 for his mother, who is 70 years old.
Let's look into the amount of tax benefit he can avail under section 80D.
Vivek can claim the whole amount of insurance premium paid of ₹67,000 as a deduction under 80D, as it is within the allowed limit of ₹75,000.
Taxable income calculation
If you and your parents both are above the age of 60 years, you can avail of a tax benefit for a maximum limit of ₹1,00,000 (₹50,000 each, for you and your parents).
Example: Ramesh is 61 years old and pays an insurance premium of ₹45,000 for himself and his son. He also pays a Health Insurance premium of ₹65,000 for his father, who is 78 years of age.
Although Ramesh has paid ₹1,10,000 towards the insurance premium for himself, his son and his mother, he can claim a deduction of only ₹95,000 (45,000 + 50,000) under Section 80D.
Taxable income calculation
Investing in a Health Insurance policy gives you the dual benefits of medical security and tax savings. Here, HDFC Bank can come to your aid. You can choose from many products and invest in the one best suited for you.
Under Section 80C of the Income Tax Act of 1961, you can save tax by investing in tax-saving FD. Calculate using an FD calculator.
The tax-saving fixed deposit is an investment financial instrument that lets you claim a deduction of ₹1.5 lakh deduction annually.
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* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.