Monday, 19 November 2018
Insurance

A Guide to Saving Tax on Health Insurance and Mediclaim

tips to save money

A health insurance plan is a contract between you and your insurer, which promises to protect you against unexpected medical emergencies and to keep your finances stable during such testing times.

Now-a-days, health Insurance is a must-have for all. Due to the skyrocketing medical costs, it is very important for everyone to have sufficient health insurance coverage. Not having adequate health insurance coverage may wipe out your savings. Medical emergencies are unpredictable. So, having sufficient health insurance coverage will safeguard you and your loved ones from getting into debts or any financial crisis in case of any emergency hospitalization or surgery due to accidents or critical illnesses’ treatments.

Apart from comprehensive medical coverage, another benefit provided by health insurance plans is tax deduction. Here, we will discuss in detail about the tax benefits offered by health insurance plans.

The premium paid towards health insurance is non-taxable under section 80D of the Income Tax Act. You can claim tax benefits if you are paying the health insurance premiums on behalf of – yourself, your spouse, your children (dependent) and your parents.

Tax Benefits of Health Insurance Policy

The tax deduction benefits of health insurance under section 80D are as follows:

  • When you pay health insurance premium for yourself, your spouse or dependent children, you enjoy tax deductions up to Rs 25,000. Earlier it was Rs 15,000 but the limit has been increased to Rs 25,000 in Budget 2015-2016.
  • When you pay health Insurance premium for parents (not necessary to be dependent), you get tax benefits up to Rs 25,000.
  • If health insurance or Mediclaim premium is paid for a person who is a senior citizen, then the amount of tax deductible is up to Rs. 30,000.

For better understanding, following is a table to show in detail thetax benefits of Heath Insurance Premiums for FY 2017-18 or AY 2018-19.

Tax Benefits of Health Insurance Premiums

Tax Benefits of Health Insurance Policy Premium u/s 80D for AY 2018-19
Scenarios Maximum Tax Deduction Limit Total deduction under Section 80D
Paid for Self, Spouse and/or dependent children Paid for Parents
All members of your family are below 60 years UptoRs.25,000 UptoRs. 25,000 Rs. 50,000
The eldest family member (you, your spouse or your children) is below 60 yearsand your parent (either father or mother) is above 60 years UptoRs. 25000 UptoRs. 30,000 Rs. 55,000
The eldest family member (you, your spouse or your child) is 60 years old and your parents (father or mother) are above 60 years UptoRs. 30,000 UptoRs. 30,000 Rs. 60,000

 Tax Benefits of Mediclaim under Section 80D

  • Tax deductions can be claimed on mediclaim plans. Tax benefits of mediclaimcan be claimed if the plan is taken by yourself or provided by your employer. The tax deduction on Mediclaim is as same as the tax deduction on health insurance plans.
  • Medical insurance policy can be taken on your dependent children and you claim tax exemption on it as well. However, your child has to be aged below 18 years and not employed. Male children (if not employed) can be covered upto 25 years and female children (if not employed) can be covered until she gets married.
  • Mediclaim or health insurance premium paid for in-laws is not allowed for tax benefits. If your spouse pays the premium, then only the tax benefits can be claimed.
  • If you have taken a medical insurance for your brother or sister, you cannot claim tax deduction.
  • In medical insurance, tax deduction can be claimed only on the premium amount.  However, service tax amount is not included.

Before you take a Mediclaim or health insurance policy, you must go for some preventive health check-up. You can claim tax benefits on medical check-up expenses as well. Up to Rs. 5,000/- can be claimed on your preventive health checkup expenses.

Before taking a health insurance plan, keep in mind the following points:

  • it is always best to opt for a lifelong policy, especially when you are buying for your parents.
  • Always look for a specialized Mediclaim adviser. He may also help you with the process of claiming tax benefits on Mediclaim.
  • Always check the renewal ceasing age before buying a medical insurance plan.
  • Be honest in declaring the current health history to the insurer.
  • No medical checkup is required till the age of 69.

A health insurance plan is not a financial investment, but a shield to protect your finances against medical exigencies. Before buying, always consider and compare the coverage and benefits offered by the health insurance plans. However, any premium paid for health insurance plans or mediclaims ensures tax saving.  So, if you want to save taxes while keeping your family protected against any medical emergencies, having a health insurance policy and/or a Mediclaim is indispensable.

 

Mr Messy loves his career and thus has gained a strong foothold in the field of digital marketing. He is compassionate and therefore strongly promotes the ideology of meditation. He is a meditation mentor and voluntarily promotes meditation. He is a passionate reader of science and spirituality and this is the reason he has the most practical fundamentals of leading life.

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