In the purview of medical inflation and the drastic rise in the number of youngsters suffering from lifestyle-related diseases, having a medical policy has become a necessity for all. No matter how many insurance plans you have invested in, if you do not own good insurance policy, your portfolio is incomplete.
Go to any tax consultant and the first thing they will suggest you is to buy a health insurance policy. It is essential to secure yourself and your family from facing expenses incurred due to unexpected medical emergencies. Moreover, premiums paid for health insurance policies enjoy tax deduction benefits under the Indian Income Tax Act, 1961. Here are the deductions available and their criteria.
Under Section 80D
If the chosen health insurance covers you against all the medical expenses incurred for self and family that is spouse, dependent children and parents then he/she can avail tax deduction up to ₹25,000.
If you have purchased health insurance for parents who are senior citizens, then the amount of deduction you can avail is up to ₹30,000.
Under Section 80DD
If you take health insurance for a family member who is handicapped and dependent, then you can claim up to ₹75,000 under section 80DD.
Under section 80DDB
If you are taking care of the medical expenses of a family member suffering from severe diseases like cancer, thalassemia, dementia, etc. then you can claim tax reduction up to ₹40,000 under section 80DD.
Under section 17
If your employer pays for your and your family’s medical allowances under the medical benefit, then you can avail tax deduction up to ₹15,000 on it every financial year.
Under section 80U
As per section 80U, any person who has disability more than 40% can claim for tax reduction up to ₹75,000. In the case of severe impairment, the maximum tax liability is ₹1,25,000.
Apart from the tax-benefits mentioned above, buying a medical policy has many other benefits, including:
Preventive Health Checkups
For insurance policy within the maximum limit of ₹25,000 – ₹35,000, the preventive health checkups enjoy the benefit of up to ₹5,000. This means if you pay a premium of ₹30,000 and undergo a health checkup of ₹5,000, you can avail total ₹35,000 under section 80D. All major hospitals nowadays provide preventive health checkup packages.
Riders
The benefits mentioned under section 80D is not restricted to any particular insurance company, and therefore you can choose any plan that fits your requirements, and from any company you wish. The tax deduction benefits under section 80D are on the premiums paid towards a Mediclaim policy, critical illness or medical insurance riders.
Cash payment
Payment of premiums made in cash facility is available, but it does not enjoy the tax benefits under section 80D. Although, you can make payment of premiums through internet banking, cheque or draft to enjoy the tax benefits on it. Cash payment made for preventive health checkups enjoys tax benefits.
Health insurance is a necessity for all to ensure the security of the family as well as get tax benefits.