While individuals purchase health insurance policies for financial security and to qualify for tax deductions, they are nevertheless required to abide by the rules listed in Section 80D of the Income Tax Act. If everyone is under 60, the premiums paid for oneself, one’s spouse, and one’s children, along with the cost of a preventative health checkup, are tax deductible up to Rs 25,000. The maximum tax deduction available to people over 60 is Rs 50,000.
In addition, one can claim a tax deduction for parent health insurance premiums. Both defined benefit and indemnity policies are eligible for tax deductions, which pay claims based on medical costs up to the total amount insured but with a fixed benefit amount.
The Requirements For Tax Benefits
For starters, other than cash, the health insurance premium must be paid using a method other than cash, such as a check or money transfer through NEFT or UPI. However, cash payments for preventive health exams are acceptable for tax benefits.
The person claiming health insurance tax benefits will not be allowed to claim any tax exemption if the premium is paid by someone else on their behalf. The person who wants to avail of the tax benefit must pay the premium out of their taxable income. The tax advantage cannot be split in a floater plan.
Those purchasing a multi-year coverage may be eligible for a tax concession proportionate to the length of the policy. The individual must obtain a certificate from the insurer detailing the amount that may be claimed.* **
Even though they are financially reliant on them, one cannot claim any tax benefits on the health insurance premiums paid for in-laws and siblings. **
OPD health subscription plans are not considered health insurance under Section 80D, so you cannot claim a tax deduction. However, under the overall cap based on the insured’s age group, cashless OPD treatment coverage and riders such as critical illness will include tax benefits.
Getting Help For A Dependent
A resident may claim a deduction under Section 80DD for medical expenses incurred by a dependent (spouse, children, parents, brothers, or sisters) who has a disability.
Understanding the dos and don’ts of availing tax benefits for health insurance is essential for individuals seeking financial relief while safeguarding their health. Health insurance is a crucial tool for mitigating the impact of medical expenses and ensuring comprehensive coverage. By adhering to the following do’s, individuals can maximise their tax benefits: researching and selecting suitable health insurance plans, investing in preventive healthcare, and staying updated on tax regulations and exemptions. Additionally, it’s equally crucial to avoid the following: neglecting policy terms, delaying premium payments, and trying to claim deductions for ineligible expenses.
Make sure you renew your health insurance on time.
Claims are subject to terms and conditions set forth under general health insurance policy.
Standard T&C Apply
Tax benefits are subject to change in prevalent tax laws.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.