Here is a Comprehensive Guide to Health insurance and Tax Savings

Health insurance is one of the most important investments that anyone can make to ensure complete protection for themselves and their families during medical emergencies. Health insurance plans offer attractive tax benefits in addition to helping you save significantly on medical costs. Many people invest, both in life insurance and health insurance, because of the tax benefits.

Tax benefits are provided on the premium amount paid for health insurance. According to Section 80D of the Indian Income Tax Act, the premium of your health insurance is tax deductible. In other words, you can deduct the premium you pay, up to a specified limit, for health insurance from your taxable income. As a result, you can be confident that your taxable income and, consequently, your effective tax rate will decrease. The Income Tax regulations are subject to change, so make be aware and updated with the latest reforms.

Understand Section 80D:

Section 80D of the Income Tax Act allows for tax deductions of up to INR 50,000 for premium payments on health insurance plans for self and family. This tax benefit is available to residents, their spouses, children, and parents, as well as Hindu Undivided Families (HUF).

How To Save On Tax With Health Insurance Premium?

As a policyholder, you are eligible for a deduction of up to INR 25,000 each year, subject to the price of your health insurance premium. The policy's coverage is available to you, your spouse, and your dependent children. If you or your spouse is 60 years of age or older, the maximum tax advantages on senior citizen health insurance plans will increase to INR 50,000. Also, you get additional tax benefits for health insurance premiums paid for your dependent parents, which is INR 25,000 if they are less than 60 years old and INR 50,000 if any of them are more than 60 years of age.

If you as well as your parents are senior citizens, you can claim up to INR 1 lakh. This limit is backed up by INR 5,000 coverage for expenses expended for family members' preventive health check-ups of self, spouse and dependent children, which is a part of the total limit.

Types of Deductions:

1. Premium paid for self, spouse and dependent children.

2. Premium payment made for Health Insurance of dependent parents.

3. Expenses of preventive healthcare checkups of INR 5,000, which is included in the total 80D limit.

Let’s understand with an example. Anmol is 35 years old, and his father is 62 years old. He has taken a health insurance plan for himself and his father and thus pays premiums equal to INR 26,000 and INR 35,000, respectively.

While filing for tax benefits under section 80D, Anmol can claim up to INR. 25,000 for himself since he is not a senior citizen and INR. 35,000 for his father. For senior citizens, claims can be filed for up to INR 50,000. Therefore, Anmol can claim a total of INR 60,000 as a tax deduction.

What happens in HUF?

A health insurance policy purchased by a HUF for any of its members may also qualify for a deduction under section 80D. If the insured member is under 60 years old, the deduction is INR 25,000; if the insured member is 60 years or above, the deduction is INR 50,000.

Conclusion:

A health insurance plan, is a good investment at any age. It is a cost-effective way to protect your family and yourself from unforeseen healthcare expenses. Section 80D of the Income Tax Act allows for a tax deduction for health insurance premiums. Thus, health insurance is a smart way to secure your health while also availing tax benefits on income.

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