Health insurance is an essential commodity today. The pandemic has especially opened up our eyes to the perils of not having one. While it is a great financial resource for managing health expenses, we cannot forget its role as an integral part of our health insurance tax benefits.
Thanks to the ever hectic lifestyle in the twenty-first century, even individuals in their 20s can be seen suffering from severe health complications like cholesterol and diabetes. Therefore a person must consider buying health insurance as soon as possible. There is also a substantial income tax deduction for medical insurance premiums under Section 80D of the IT Act to provide further encouragement to people. Before claiming the health insurance tax benefits on health insurance premiums, you must seek clarity on the following categories –
- Investing in the Right Health Insurance Policy
- Saving taxes
How to Claim Health Insurance Tax Benefits in India?
There are a few steps that will assist you in being able to claim the maximum amount of advantage from the health insurance tax benefits available to you from paying premiums for medical insurance. Firstly, ensure that you always file your Income Tax Returns at least a few weeks before the due date to avoid the last-minute rush. This will make sure that you have enough time to provide accurate information regarding your health insurance and claim the applicable tax deductions in a problem-free manner.
Who Is Eligible to Claim Income Tax Deductions on Medical Insurance?
Under Section 80D, an individual will be eligible to avail a host of substantial deductions under income tax on the premiums that are paid towards any particular health insurance plan in a couple of cases –
- The insured party is an individual who has bought a health insurance policy for their own selves, or their spouse(s), or dependent children, or even their parents
- In case the insured individual is a member of a HUF (Hindu Undivided Family)
What Are the Deductions Under Income Tax Available Below 60 Years of Age (Proposer And Parent)?
In case a person is buying an individual health plan for themselves and is still below 60 years old, he/she will have the option of claiming health insurance tax benefits that range up to Rs. 25,000 in one single financial year on the mediclaim premium. In case the individual is also in the market for a health insurance cover for his/her dependent parent(s) who is also below 60 years of age, the person can avail of an added deduction of Rs. 25,000.
What Are the Tax Exemptions Available Above 60 Years of Age (only Parents)?
In case you have bought an individual health insurance policy for a dependent parent who has crossed the threshold of 60 years of age, the health insurance tax benefits limit is then hiked up to Rs. 50,000 from the previous Rs. 25,000 limits. Hence, in case your age is still less than 60 years and your dependent parent has now grown more than 60 years old, you are eligible for claiming a tax deduction that ranges up to Rs. 75,000, if you buy an individual medical policy for yourself as well as for your dependent parent. In this case, Rs. 25,000 is the deduction applicable for your own payable health insurance premiums, clubbed with the Rs. 50,000, which is applicable for the premiums that must be paid for your dependent parent.
What Are the Health Insurance Tax Benefits Available Above 60 Years of Age (Proposer and Parent)?
In case both you and your dependent parent’s age exceeds the threshold of 60 years, the maximum limit on the medical premiums’ tax-deductibles will be set at Rs. 1 lakh. Owing to the fact that your age has already exceeded 60 years, you will be eligible for a total tax deduction on your payable premiums of Rs. 50,000. That same amount of tax deduction will also be available in the case of the dependent parent for whom the health insurance plan has been purchased.
Steps to Claim Your Tax Deductions for Health Insurance:
- When an individual fills up the ITR form, there is a column titled ‘Deductions’ where one needs to select the option titled ‘80D’, in order to claim deductions on medical insurance premiums.
- As a drop-down menu becomes available on the screen, on which there will be 7 options to select from and you must choose the condition under which you will be claiming the tax deduction. The seven options are as follows – Self and family, Self (Above 60 years) and family, Parents, Parents (Above 60 years), Self and family with parents, Self and family with parents above 60 years, and finally, Self (Above 60 years) and family with parents above 60 years.
- You must add your supporting proofs and documents in the form of attachments so that the IT department will be able to confirm your deduction. You must make a note of the fact that the tax deductions on your medical insurance premiums can be claimed only after the payment of the premiums has been completed via net banking, or credit/debit card, or through a cheque, or even a draft.
Premiums that are made via cash payments will not be eligible for health insurance tax benefits. Moreover, you will require the supporting documents along with the proofs so as to claim the deduction successfully.
When Can You Claim Tax Deductions on Medical Insurance Premiums?
The health insurance tax benefits can only be claimed for one single financial year. For example, in case an individual is paying the Medical Insurance premium for the fiscal year of 2018/19, you will only be able to claim the tax benefits when filing ITR for 2018/19. You cannot claim any deductions for the premiums that have already been paid for in the last financial year or the ones which are going to be paid in the coming financial year.