Life is uncertain, and so are the healthcare problems that an individual may suffer. It is one reason why people buy health insurance in India. They can get the required financial backup in case of medical emergencies by opting for one of the best health insurance plans with adequate coverage. Most of the people know about the primary benefits of these plans – The insured pay the premium to the chosen insurance company regularly and get the financial aid in return in case of a medical contingency. However, you do not only get medical benefits on buying health insurance, but much else. Another significant benefit is of substantial tax exemption under Section 80D of the Income Tax Act, 1961.
Let’s dig deeper to know more about the tax benefits of buying health insurance:
Lower Your Tax Liability with Health Insurance
No matter if you are a salaried individual or run a business to earn a livelihood, you must have always thought of saving tax on your income. As an efficient tool to save tax, a health plan reduces annual income tax liability depending on the premium you are paying for it every year. As per Section 80D mentioned above, the premium you pay for a health plan gets deducted from your taxable income while you file the income tax return every year.
In simple words, you must buy a health insurance policy if your total annual income makes you liable to pay income tax.
Explaining Section 80D of the Income Tax Act
As per the Income-tax laws, Section 80D makes you get the tax benefits in the following ways:
- The upper limit for the tax deductions related to the health plan that includes you, your spouse, and your children is INR 25, 000 and is extensible to INR 50, 000 for senior citizens. Thus, the maximum limit of tax exemption you can avail is INR 75, 000.
- Whether your parents are dependent on you or not, you can get the tax benefit on the premium you pay for their health plans.
- In some rare cases where both the individual and his parents are above sixty years of age, the deductible amount gets extended up to INR 1, 00, 000.
- You can also avail tax exemption of INR 5, 000 to cover the expenses incurred for preventive health checkups of your senior parents who are above sixty years.
Here’s a table to let you better understand the tax exemption limits related to health insurance –
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Age Combinations
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Tax Exemption on Health Insurance
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Tax Benefit for Preventive Health Check-up
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Your age and your parents’ age are below 60 years
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INR 25, 000 + INR 25, 000
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INR 5, 000
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Your age is less than 60 while your parents are senior at or above 60 years of age
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INR 25, 000 + INR 50, 000
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INR 5, 000
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Your age and your parents’ age are above 60 years
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INR 50, 000 + INR 50, 000
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INR 7, 000
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Factors You Should Consider While Buying Health Insurance
As detailed above, you can get dual benefits of buying a health plan in your life – medical coverage for yourself and your family, plus tax exemption while filing the income tax return. However, there are other significant factors that you should consider while buying one of the best health insurance plans[ST/1] [TS2] [TS3] . These are as follows:
- Know Your Needs
It is best to think about your needs while buying a health plan and do not make a buying decision in a hurry.For instance, think about your current health condition and that of your family members.
- Choose a Lifelong Health Plan
You are advised to choose a health insurance plan that covers you and your family until the age of seniority, which is 60 or above.
- Carefully Choose an Insurer
Make sure you buy a health plan from a reliable insurance company in India who is known for the high claim settlement ratio it offers.