Health Insurance protects you against expenses that arise due to any medical emergency so that you can completely focus on getting better and not suffer the stress of settling the medical bills. Some healthcare emergencies have the possibility of wiping out your savings which can have a negative impact on the rest of the family for a foreseeable future. This is why you need to ensure that you carry a valid health insurance policy for you and your family. Not only does health insurance form a safety net for you but the premium you pay to keep your health insurance valid is also deductible from your tax amount. Basically, getting health insurance for yourself and your family is also a tax-saving investment! Read on to know how health insurance helps you save taxes legally.
How to Save Tax with Health Insurance?
Section 80D and subsequent sections of the Income Tax Act lay down certain rules and regulations that state the amount of deduction available and the eligibility criteria for availing such deduction. Let’s find out what they are!
Treatment of Tax Under Section 80D
If you’re a policyholder then you are eligible for a deduction of Rs 25,000 towards the premium you pay for health insurance policies. This limit increases to Rs 50,000 if the policyholder is a senior citizen or if you’re or your spouse is older than 60 years. You are also eligible for a further deduction of Rs 5,000 if this amount is used for preventive healthcare checkups.
You should keep in mind that this deduction is not applicable if you have made the payment in cash. To avail of this benefit, the premium for the insurance policy should be paid only through a specific mode of payment like a cheque, demand draft, or debit/credit card.
Eligibility for the Deduction
To claim the deduction on your tax liability you first need to fulfill certain eligibility requirements which are as follows-
- The most basic eligibility criteria that you need to fulfill is that you should be paying your premium amount to keep the insurance policy active. Without paying your premiums you cannot claim this deduction on your tax liability
- In addition to this, if your parents are above the age of 80 and don’t have a health insurance policy of their own, then you are eligible to claim deductions for expenses you incur for their medical check-ups.
There are other sections in the Act like Section 80DDB, 80DD, and 80U that deal with specific types of medical situations like treatment of critical illness and treatment of dependents with a disability or in case you have any medical disability. There are different levels of deduction available under these sections and you should go through them in case they are applicable to you.
You should consider a health insurance policy to be an investment and not an expenditure as having a valid insurance policy can really be helpful in the certain grave and emergency situations. You should ensure that you are getting a health insurance policy that suits your needs and not just as a way to reduce your tax liabilities. After all, this investment is to ensure you have peace of mind about your future health. Stay safe, stay protected!