How Can You Save Tax by Insuring Your Parents?
Published On Feb 15, 2021 5:30 AM By Sakshi Aggarwal
There are many options when it comes to tax savings and one of the promising ways to incur higher tax benefits is to seek health insurance for parents. Buying health insurance for aging parents who are susceptible to health problems may earn tax deductions up to Rs. 25,000 under section 80D of the Income Tax Act.
Saving Tax by Insuring Parents With Health Insurance
Health insurance is an important aspect of financial planning and it comes with an additional benefit of tax saving. The regular insurance will cover self, spouse, and children and the tax benefit can be extended by including parents under the insurance cover. Health insurance for dependent parents can also help at times of medical emergencies to handle their health care costs without any hassles. Covering parents under the family medical insurance does incur higher premiums, but it is still worth adapting for the financial benefits it renders.
According to the section 80D of the Income Tax Act, the tax benefit of including non-senior citizens in the family insurance scheme is about Rs. 25,000 and for senior citizens, it is about Rs. 30,000. And if both the parents are insured, the benefit of tax deduction will be about Rs. 30,000. Also, Rs. 5,000 can be used for the health checks of the aged parents and this contribution can also be included with the health insurance premium and projected towards tax saving.
Tax deduction benefits on the health insurance of aged parents are applicable only if the premium is paid through digital channels such as credit and debit cards.
Health Insurance for Parents Who Are Senior Citizens
Section 80D of the Income Tax Act ensures higher tax deductions for insuring very senior parents who are over 80 years of age. Tax claims can be made for the medical treatment of the very senior citizens who are not covered under any type of insurance. The maximum allowable limit for seeking this type of insurance is about Rs. 30,000.
Under this rule, if one of the parents is above 80 years and are uninsured and the other parent is below 80 years of age, then the maximum tax benefit that the policyholder could claim is about Rs. 30,000. This cost might include medical treatment, medical checkups, and also the medical insurance of both the parents combined.
Tax Benefit for Treating Parents with Special Illnesses
The expenditure for certain long-term and special illnesses such as chronic renal failure, malignant cancers, hematological disorders, and neurological disorders are also eligible for income tax deductions. Under section 80 DDB of the Income Tax Act, the policyholder can avail of a tax deduction of up to Rs. 60,000 for senior parents and up to Rs. 80,000 for parents who are over 80 years of age.
Tax benefits can be availed by insuring parents with disabilities as well. Tax deduction up to Rs. 75,000 or up to Rs. 1.25 Lakh is applicable for severe disability. It all depends on the type of health insurance and helps the policyholder to enjoy tax benefits by covering their aged parents under health insurance.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.