Tax Benefit under Section 80D is available now in health insurance policies, whenever the insured pay premiums under a health insurance policy can get certain tax deduction.
Health insurance is the second important and the most important one after life insurance that should everyone must have in his/her portfolio. Health Insurance Plans are essential for every person as it gives security and safety to the insured person with various benefits. There are various kinds of health insurance policies such as Individual Health Insurance Plans, Family Floater Plan, Children Insurance Plan, Car Insurance Plan, Mediclaim etc. These plans are different from each other in which suppliers can be seen and the amount to pay can be guessed, so it is much more important to know about the costs and essential health insurance terms. But this health insurance plans work in a simple way like here the insured has to pay regular premiums to the insurer and in return, the insurer gives coverage financially for a medical emergency. Similar to life insurance, a health insurance plan also acts as a very effective tax saving tool that provides the insured strong tax release under section 80D.
Most of the financial planners say that the first ever step in any kind of financial plan must be ensured that the person should have a complete health plan and this complete health insurance is a coverage for the person and his/her family before starting saving. The paid premiums for that particular health insurance plan also provide a tax benefit by decreasing both the taxable income and tax liability. But this is not known to most of the people, this article is a resource for everyone who is interested to know about tax benefits of health insurance plans as per income tax laws.
In any health insurance plan, the paid premiums for the chosen health insurance policies for parents qualifies for rebate under Section 80D of the Income Tax Act. This benefit is also available for individuals on health insurance premium which is paid for self, spouse, children and parents; but it doesn’t matter if the children or parents are dependent on the policyholder or not. Actually the amount of tax benefit depends on the individual’s age who is medically insured under the health insurance plan. The maximum deduction on given premiums for self, spouse, children and parents (below 60) can be Rs. 25000 a year; the paid premium by an individual for his/her senior citizen parent can be deducted at Rs. 30000. On the other hand, a tax payer may increase the tax benefit under Section 80D of Rs. 55000 for below 60 parents and for the above 60 the maximum tax benefit under Section 80D would be Rs. 60000.
Life insurance companies riders
The Section 80D tax benefit is on premium paid for health policy which does not stop anyone to buy health plan only from health insurance companies. The premium paid for critical illness or medical insurance riders in a life insurance policy also makes qualify for tax benefit and other premium on health insurance policies of life insurance companies can also get the same tax advantage.
If a person pays a premium if Rs 20000 for Mediclaim and go through a health check-up of Rs 5000 then total Rs 25000 can be benefited under section 80D. Most of the hospitals offer preventive health check up packages. Tax benefit is available on both ‘indemnity’ and ‘defined benefit’ of health insurance plans; not only indemnity plans like individual health insurance plans called Mediclaim and Family Floater Plans but also defined benefit plans like daily hospital cash plan and critical illness plan under any health insurance company or general insurance company would qualify for tax benefit.
The income tax rules dejects tax benefit on premium paid on cash so to get cash benefit one have to pay by internet banking, cheque, draft or even by credit card to get tax advantage on premium.