Exorbitant costs of healthcare has made it is necessary to buy a Health Insurance Policy nowadays. Even if you have a company group health insurance, it is always advisable to have a separate individual health plan to ensure the same financial safety when you are not employed or when your company withdraws the policy. Apart from providing financial security during medical emergencies, buying a health insurance plan also gives you tax benefits. Tax benefits for premium paid for health insurance can be claimed under section 80 D as per Income Tax Act, 1961.
Below is the list of tax deductions you can claim on health insurance premium.
For Self, Spouse And Children: You can claim deduction for any health insurance premium paid for self, spouse or children up to a maximum of Rs. 25,000 for assessment year 2019-2020.
For Parents (Whether Dependent Or Not) Who Are Not Senior Citizens:
For any premium paid for a health plan for parents who are not senior citizens, you can claim a deduction of Rs.25,000.
For Parents (Whether Dependent Or Not) Who Are Senior Citizens:
After this year’s budget the premium paid for senior citizen’s health plan would help you claim deduction of Rs. 50,000. In the previous financial year 2017-2018, the total deduction allowed under this category was Rs. 30,000.
If You And Your Parents Are Both Senior Citizens:
In case both of you are senior citizens, the deduction claim would be Rs. 50,000 each, and so the deduction can be claimed on the total of Rs. 1 lakh.
Senior Citizens Who Are Not Eligible For Health Plan But Incur Medical Expenses:
A deduction of Rs. 50,000 is allowed towards medical expenses to senior citizens who are above 60 years of age, but are no eligible for a health plan.
You can claim additional deduction of Rs. 5,000 if you have undergone any health check-ups or tests provided you have receipts for it. However, please note that this deduction is not over and above the individual limits under Section 80 D.
For Multi-year Health Plan: Many people buy multi-year health plan so that the benefits accrue over a long period and they need not have to renew the policy every year. This also means that they will have to pay lesser premium for a multi-year health plan. While claiming tax deduction for such multi-year health, the tax deduction is spread over the duration of the policy proportionately. For example, if you bought a three-year health plan at a lump sum premium of Rs 30,000, you can claim deduction of Rs 10,000 in each assessment year.
Can You Claim Deduction If Premium Is Paid Through Cash?
You can claim deductions only if the payment for health plan premium is anything other than cash. However, expenses on health check-up can be paid in cash.
You Cannot Claim Deductions If:
You pay premium on health insurance for your in-laws. However, your spouse can claim tax benefit if he/she pays from his/her taxable income.
You pay premium on health insurance on behalf of your siblings.
Also, it is important to note that service tax on premium amount is excluded for tax deduction.