Investing in health policies will provide the chance for individuals to save tax. Tax planning is an essential element of financial planning, and therefore, requires the right approach so that it can serve two important objectives: help meet the financial goal and save tax.
Before proceeding in selecting the health policies available in the market to reduce tax, study the benefits of investing in health the insurance policy. Key factors include considering the benefits provided by the policy, the safeguard it provides during the emergency, and other services such as cashless hospitalization facility, domiciliary treatment expenses, and more. An individual is eligible for tax exemption for health policy under section 80 D.
Saving tax on premium payment
If you are a policyholder, you can avail a tax exemption of INR 25,000 per annum for a health insurance policy. It is possible for the spouse and dependent children to avail the coverage provided by the policy. The exemption increases to INR 30,000 if you and your spouse are above 60 years of age. Apart from this, you can avail additional coverage of INR 5,000 in the form of health checkups that include parents, spouse, and dependent children.
Preventive health checkups
During the policy term, you can avail tax benefit on preventive health checkups. The limit for the same is INR 25,000 if you and your spouse are below 60 years of age and INR 30,000 and above if the age exceeds 60 years. You are also eligible to claim an additional INR 5,000 for a fiscal year towards preventive health checkups.
Health insurance policy for parents
Under section 80 D of the Income Tax Act, you are eligible for tax exemption for paying the premium of health insurance policy of the parents. You can avail to a maximum of INR 30,000 per annum. In other words, you can save the amount for either of the parents.
No claim on cash payment
If you choose to claim tax benefit under health insurance policy, it is necessary to make the payment through banking modes such as demand draft, debit or credit cards, and net banking. You are not eligible for tax exemption for making the payment using cash. Nonetheless, you still possess the chance to claim INR 5,000 as tax benefit towards preventive health checkups made using cash payment.
Tax benefit for floater health insurance plan
A floater health insurance plan provides coverage for the spouse, children, and other dependents in the family such as parents. Under this section, HUF (Hindu Undivided Family) can claim tax benefit on the premium paid by the individual subject to the maximum tax benefit provided under the section.
Tax exemption for treatment of critical illnesses (section 80DDB)
Apart from the regular diseases, a health insurance policy also provides the chance for tax exemption up to INR 60,000 for senior citizens and INR 80,000 for very senior citizens for treating critical illnesses. These illnesses include cardiac diseases, cancer, and chronic renal failure. Attaching the certificate provided by the doctor is essential while claiming for tax exemption. It is possible for you to claim tax benefit for self, parents, spouse, children, and siblings.
Tax saving under section 80 DD
If you are assuming care of a disabled dependent, you are eligible for a maximum deduction of INR 75,000 for a fiscal year. Apart from the treatment, nursing, maintenance of the dependent, and cost of training rehabilitation can take you to INR 1.25 Lakh in case of severe disability.
Tax deduction on medical allowance
If the employer pays medical expenses using your salary, you are eligible for tax exemption for a maximum of INR 15,000 per annum and for more information you can also visit Online SBI