Financial scholars propose that the while doing your financial planning, the foremost step is to ensure your good health, and there is nothing than a health insurance plan to ensure your financial safety. Hereby one must opt for health insurance for self or their families. And the most alluring fact that, the amount paid as health insurance premium also exempted from tax deduction and this way it contributes to tax benefit. You can find various health insurance plans including L&T health insurance, which offer tax benefits along with other advantages.
Here are some lesser-known facts debunked about tax saving advantages of medical insurance.
Premium paid for Parents:
Section 80D of Indian Income Tax Act says that one can avail tax benefit from paying the premium towards their parents’ heath insurance policies, self, children or spouse, irrespective of the parents or children are reliant on them or not. You an avail a maximum tax benefit of Rs. 25,000 in a year, by paying the premium towards health insurance for child, spouse, self or parents.
In case the premium paid for the parents who are above 60 years old, the maximum cap is for tax benefit is Rs. 30,000 in a year. This way you can avail tax benefits up to 55,000, when you are below 60 and your parent’s age is more than 60. Again, those who are at their 60s or more and also paying health insurance premium for their parents can enjoy tax benefit up to 60,000 per year.
You can avail tax benefit up to Rs. 5000, within the slab of Rs 25,000-30,000 premium paid towards your health insurance. With preventive medical check-up projects offered by various hospitals, you can enjoy tax benefits on the amount you paid. For instance, you pay the premium of 30,000 towards health plan and done a mediclaim check-up for Rs. 5,000. Under 80D the total cost you can aviled for tax benefit is 35,000. With lifestyle illnesses on the climb, it’s always advisable to keep a regular check on one’s health.
Tax Benefit on ‘indemnity’ and ‘defined benefit’ Plans
Both ‘indemnity’ and ‘defined benefit’ health insurance policies offer tax benefit. Indemnity plans include Mediclaim and Family Floater plans while ‘defined benefit plans’ like daily hospital cash policy and critical illness policy of any health or general insurance provider would refer for tax saving benefit.
Life insurance companies riders
As per Section 80D the premium paid towards health insurance is exempted from tax deduction and hence one is not restricted from buying health plan only from health insurance companies. You can avail tax benefits on premium paid towards medical insurance or critical illness riders in a life insurance policy, as mentioned in the same section on Income Tax Act.
If you want to avail tax benefit on your premium, avoid paying by cash. You may find paying your premium in cash. But the insurance experts advice not to pay in cash. Rather you can opt for other paying modes like net banking, cheque, draft or credit card. With internet booming, it is much easier to pay through your debit or credit cards in one go without any hassle. But you can pay in cash while going for preventive medical check-ups and avail tax benefit under Section 80D.
There is no point investing randomly anywhere to save taxes. . But paying for health insurance means you are not only securing your health but also it aids in restoring your peace of mind during tax-paying period. With sky-high medical expenses, purchasing a medical insurance policy certainly restrain you from being bankrupt. However, health insurance plans may vary insurer to insurer in terms of premium rate, features and so require an informed decision!