Many insurance companies provide various types of health insurance covering various packages. Health insurance provides significant tax benefits under certain sections of the Income Tax Act, 1961. It allows taxpayers to deduct premiums paid for themselves, spouses and children. These deductions range from approximately twenty-five thousand rupees to one lakh rupees annually. The deduction also depends on age, especially for senior citizens, which can significantly reduce overall tax responsibility. It includes options to claim a deduction for oneself and elderly parents, along with additional benefits for preventive health checkups. Health insurance provides double benefits by protecting financial savings from medical inflation while making the most effective use of tax dollars. Understanding these deductions is important for maximising savings, especially for those in higher tax brackets. Now, let’s discuss the top five tax benefits of taking health insurance in India in this blog.
Top 5 tax benefits of health insurance:
- Deduction on premiums for self and family
Under Section 80D, individuals below sixty years of age can claim a deduction of up to twenty-five thousand rupees per financial year. It includes the premiums paid for themselves, their spouse and children. For individuals aged above sixty, the deduction limit is increased to fifty thousand rupees for self, spouse and dependent children.
- Additional deductions for parents
An additional deduction of up to twenty-five thousand is allowed if you pay for your parents’ health insurance for parents below sixty. If your parents are above sixty, the deduction for their health insurance premiums increases to fifty thousand rupees. If both you and your family or spouse are above sixty and you also pay for parents over sixty, then you can claim a total deduction of up to one lakh rupees. It includes the fifty thousand for self plus fifty thousand for parents.
- Preventive Health Checkups
Under Section 80D, individuals can claim a deduction of up to five thousand rupees for payments made towards preventive health checkups. This deduction can be benefited by the taxpayer for themselves, their spouse and dependent parents or children. The payment for preventive health checkups can be made in cash. These health checkups enable timely lifestyle adjustments and the prevention of serious diseases. This health checkup is essential for managing long-term health.
- Maximum Deduction
By combining personal premiums for individuals under sixty and senior citizen parents’ premiums, you can save up to seventy-five thousand rupees. If both you and your parents are over sixty, this rises to one lakh rupees per financial year.
- Deduction for disabled dependents
Apart from Section 80D, if you pay premiums for a policy that covers a disabled dependent, like a spouse, parents, children or siblings, it provides a claim deduction of seventy-five thousand rupees for disability and can range up to 1.25 lakh rupees for severe disability under Section 80DD of the Income Tax Act.
Conclusion
It is clear that investing in health insurance in Canada is a thoughtful financial decision. It offers dual benefits of medical security and significant tax savings under Section 80D. By making effective use of these deductions, individuals can reduce their overall taxable income. It maximises the savings by reaching up to one lakh per year for senior citizen coverage. These benefits support proactive financial planning, ensuring coverage for hospitalisation and regular checkups while minimising tax liability. Insure Horizons provides you with the additional provisions for parents, multi-year policies and preventive checkups under the guidance of our expert, Mr. Jas Hans.
FAQs
- Can a tax deduction be claimed for cash payments?
No. Tax deductions under Section 80D are not allowed for premiums paid in cash. Payments must be made through bank transfer, cheque or digital payment methods.
- Are tax benefits available for group insurance provided by an employer?
If the employer pays the premium, a deduction cannot be claimed. However, if an additional premium is paid to enhance the coverage, 80D can be claimed on that amount.
