The increasing cost of availing medical and healthcare services is a matter of concern for all. Having a Health Insurance cover helps in reducing the out of pocket expenditure that would otherwise be more than what one could afford. By paying a small amount of money as a premium one need not worry about unprecedented medical emergencies. A primary health insurance plan generally covers costs such as hospitalization, surgical expenses and medical check-ups. In order to promote the importance of health insurance, the government has provided certain tax benefits on Health Insurance. This article will help you understand the various aspects related to relief in taxation that is available on Health Insurance.
Tax Benefits on Health Insurance
Exemption on Health Insurance Premium
An individual or HUF can avail a deduction u/s 80D on the premium they pay towards their health insurance. Here deduction is available if the policy is taken for self, spouse, children and parents. Additionally, the deduction limit will also vary on the basis of the person who is paying the premium. Here a family comprises of self, spouse, dependent children and dependent parents.
|Premium Paid For||Deduction Amount|
|Self, Spouse and Children (All members below 60 years)||INR 25,000|
|Self, Spouse, Children and Parents (All members below 60 years)||INR 25,000 + INR 25,000 = INR 50,000|
|For Self, Spouse, Children (all members below 60 years) and Senior Citizen Parents||INR 25,000 + INR 50,000 = INR 75,000|
|For Self, Spouse, Children (with the eldest member above 60 years) and Senior Citizen Parents||INR 50,000 + INR 50,000 = INR 1,00,000|
Exemption on Preventive Health Checkups
Deductions are also available under section 80D for preventive health checkups. The maximum benefit that is available for preventive health check-ups is INR 5000. This expense is, however, within the limits that are applied and not over and above the individual limits.
Exemption for Individuals with Disability
Individuals with a disability can claim a deduction under section 80U. A person is considered disabled when he is suffering from more than 40% and less than 80% disability. A severely disabled individual is someone who is suffering from more than 80% disability. Under this section, a person with a disability will be able to claim INR 75,000 and a person with a severe disability person will be able to claim INR 1,25,000 as a deduction.
Exemption on Treatment of Critical Illness
Under section 80DDB, any resident individual or HUF can claim deductions on the expenses that are incurred on the treatment of specified diseases. If the deduction is claimed for an individual/HUF member who is below 60 years than INR 40,000 is the exemption amount. However, if this deduction is for an individual/HUF member who is above 60 years then the exemption amount is INR 1,00,000.
Exemption on Annual Medical Allowance
A salaried individual is also allowed an annual deduction of INR 15,000 as a medical allowance for expenses incurred on the purchase of medicines for self, spouse, children and parents. This deduction is available only if you provide the bills of all the expenses that you have incurred.
Exemption on Maturity Amount received
If the premium paid is less than 10% of the sum assured for policies issued after 1st April 2012 and 20% of the sum assured for policies issued before 1st April 2012, then the maturity amount received or any bonus amount received will be tax-exempt under Section 10(10D). This section also covers policies taken after 1st April 2013. But it is applicable only to those individuals who have a disability or a disease specified under Sections 80U and 80DDB respectively. And in this case, the premium paid should be less than 15% of the total sum assured.
TDS on Life Insurance Policy
If an individual or HUF receives more than INR 1 lakh from a life insurance policy that is not covered under an exemption under Section 10(10D), then TDS @ 1% shall be deducted by the insurer before making this payment. The same goes for the bonus payment. However, if the amount is less than INR 1 lakh, no TDS will be deducted, although the amount will be taxable.
Yes, under section 80DDB, you can avail deductions on the expenses incurred for the treatment of specific diseases like malignant cancer, AIDS, dementia, neurological disorder, chronic kidney failure, haemophilia and thalassemia.
Yes, you can avail of tax benefit up to INR 5000 for preventive health check-ups under section 80D on a yearly basis.
No, an individual cannot avail of tax benefit u/s80D if they have made a cash payment for your health insurance premium.