Health insurance coverage is one of the most cost-effective ways to ensure that you and your family receive high-quality medical treatment. Aside from this valuable benefit, the right health insurance is also quite an effective tax-saving mechanism. “Regardless of whether you spend a premium for the single parent or even both parents, you would be allowed to claim a deductible for the entire amount of premium paid up to an optimum of Rs. 25,000 under the terms of the Income Tax Act.”
Unfortunately, many people buy health insurance just to save money on taxes. When the deadline for submitting tax returns approaches, individuals, rush to get their first health insurance coverage, they come across to save money. Whilst the method can save you money on taxes, you may end up with a coverage that isn’t suited for you.
Why choose something at random when obtaining a health plan when you might choose the right health insurance that meets your needs? Before we get into the specifics of what to look for when buying the right health insurance, let’s take a look at how much money you could save on taxes by doing so.
Deduction Available Under Section 80D
By acquiring health insurance, you could save up to Rs. 25,000 per year under Section 80D of the IT Act. As a result, premiums of up to Rs. 25,000 can be deducted from the taxable income in a financial year. This rule applies to any insurance bought for yourself, your kids, your spouse, and your parents who are under the age of 60 (the policy has to be in your name).
The tax deduction limit is Rs. 50,000 if you are buying insurance for your parents who are over 60 years old. For example, if you purchase insurance for yourself and your parents over 60 years old, the maximum deduction limit in a financial year is Rs. 75,000. This limitation will be increased to Rs. 100,000 if you and your parents are beyond the age of 60.
The premiums paid for health insurance policies are deductible as per Section 80D of the Income Tax Act. Individuals who pay their spouse’s, own, dependent children’s, plus parents’ health insurance premiums are eligible for the benefit.
The amount of the tax advantage is determined by the age of the medically covered person. The optimal deduction available on premiums paid for self, children, spouse, and parents is Rs 25,000 per year, provided the person is under the age of 60.
For individuals paying 5.20 %, 20.8 %, and 31.2%, the optimum savings under section 80D (considering Rs 25,000) are Rs 1,300, Rs 5,200, and Rs 7,800, accordingly. This is in addition to any savings made under Section 80C of the ITA.
Income Tax Deduction Eligibility Under Section 80D of ITA
The premiums you spend for health insurance coverage are deductible from your taxable income for that fiscal year. When you have a family floater health insurance plan which covers your spouse, you, and your children, the premium paid for specific family members’ coverage minimize your income tax burden.
This portion of the income tax statute benefits the following members of the family:
- Your Spouse
- You (policyholder)
- Your Children
How Do You Choose the Right Health Insurance?
Here are a few things to keep in mind when it comes to securing the right health coverage for you and your family.
The coverage provided is one of the most crucial factors to consider the right health insurance. Family floater, individual, and group health insurance policies are now available from most big insurance companies. If you’re looking for an individual plan, seek one that includes pre-and post-hospitalization benefits, as well as ambulance coverage and day-care fees.
This should cover a wide range of medical conditions, including those that are more likely to hit you due to your lifestyle, age, or family history. When you decide to go with a family floater plan, be sure it fits the medical needs of every family member.
The insurance company’s claim submission procedure should be simple and quick. In the event of a medical emergency, you ought to be able to file a claim in various methods to save time and effort.
Also, look into the insurance company’s claim settlement ratio. The overall claims received by the company and the overall claims resolved in a year are used to compute this ratio.
Cashless claims remove the need to pay the medical bills first and then wait for the insurance company to repay you. However, this service is only provided at the insurance service’s network hospitals.
As a result, make sure that the insurance company you choose has a large network of hospitals in your area and the city wherever you live. The reimbursement option is available at out-of-network hospitals.
The need for health insurance increases as you grow older. However, keep in mind that not all health insurance plans are renewable indefinitely, and you would no longer be eligible to renew such insurance once you reach the age of 60 years.
As a result, policies that can be renewed indefinitely are preferable. These policies ensure that even the elderly are adequately protected in case of unforeseen medical events. It will allow you to take advantage of the tax benefits on health insurance for a prolonged period as well.
While buying health insurance is among the most prevalent tax-saving strategies, you must not wait until the end of the year to do it. You’re more likely to buy the wrong insurance if you are in a rush to file your income tax returns. To make the best option, begin looking for the right health insurance ahead of time and keep the points indicated above in mind. Always choose a reputable insurance company that offers a variety of health plans to choose the one that best meets your and your family’s healthcare requirements.