What are the Tax Benefits of Health Insurance
March 11, 2020
One of the biggest benefits of purchasing health insurance is the tax deduction available under Section 80D of the Income Tax Act. It can help you claim deductions of up to Rs 25,000 to Rs 1 lakh on the premiums paid towards a health insurance policy in a year. Read further to know tax benefits of health insurance.
Just like life insurance, a health insurance policy is also a must in every portfolio. While financial security in case of a medical emergency is the primary reason to invest in health policy, it offers several additional benefits too. For instance, the premiums paid towards a health plan in a year is eligible for tax deduction up to the pre-defined limits.Let us have a look at how much the deduction is when you purchase a health plan for yourself and other members of your family.
Tax deduction on Health Insurance premiums
When it comes to health insurance, the premium amount can be deducted from your taxable income for computing your income tax liability. However, the deduction is available up to a pre-defined limit.Here are the tax deduction limits on health insurance premiums:
- Up to Rs 25,000 for individual health policy if your age is below 60 years
- Up to Rs 25,000 if you have purchased an individual policy for your parent who is below 60 years
- Up to Rs 50,000 if you have purchased a health policy for a senior parent above 60 years
- Up to Rs 75,000 if your age is below 60 years and you have purchased health policies for yourself as well as a senior parent
- Up to Rs 1 lakh if you are above 60 years and have purchased health policies for yourself as well as a senior parent
Tabular representation to help you understand the deduction better
|Individual policy purchased for yourself where you are less than 60 years old||Rs 25,000||Rs 25,000|
|Individual policy purchased for a parent who is below 60 years||Rs 25,000||Rs 25,000|
|Individual health policy purchased for a senior parent||Rs 50,000||Rs 50,000|
|Policies purchased for yourself (below 60 years) and a senior parent||Rs 25,000 + Rs 50,000||Rs 75,000|
|Policies purchased for yourself (above 60 years) and a senior parent||Rs 50,000 + Rs 50,000||Rs 100,000|
Tax deduction on preventive health check-ups.The health insurance benefits on taxes are not limited to premiums. Section 80D also allows deduction on expenses incurred on preventive health check-ups. The deduction limit is Rs 5,000 for individuals below 60 years and up to Rs 7,000 for health insurance policyholders who are above 60 years.Not just the policyholder, but the preventive healthcare expenses incurred by their spouse or dependent children are eligible for this deduction too. But this deduction is within the premium deduction limits stated above.But for instance, if an individual below 60 years pays health insurance premium of Rs 22,000 in a year and spends Rs 3,000 on preventive health check-up, he/she can claim a deduction of Rs 25,000 as the maximum deduction limit is Rs 25,000.Protect your health and save tax with Health InsuranceMake sure that you don’t purchase a policy only because of the health insurance tax benefit. Understand your health insurance needs and then select a policy based on your requirements to get maximum protection for your health along with the tax benefits.Consider a reputed insurer and understand the policy in detail before finalising the purchase to make the best use of the policy.
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