Find Out About The Tax Benefits Of Buying Health Insurance In India
Published On Sep 14, 2023
It is rightly said ‘health is wealth’ and there is no better investment than health insurance. Health insurance not only protects you against health emergencies but also offers additional benefits like tax savings. So, find out all about the tax benefits of buying health insurance in India with us.
Table of Contents
What is Health Insurance?
Health insurance or a mediclaim policy is a contract between the insurer and policyholder whereby the former agrees to provide financial assistance in case the latter meets any medical emergency. Owing to the many benefits that health insurance offers, there are a number of companies such as Care, Reliance, HDFC Ergo, and more that provide an array of health insurance plans. So, while buying a health insurance plan, you must check which of these insurers provides the best coverage at affordable premiums.
Tax Benefits of Health Insurance
Want to save tax and not sure what to do? Then, the best way is to buy a mediclaim policy which offers tax benefits as specified under the Income Tax Act of 1961. It is under section 80D of the Income Tax that you get the benefits of tax savings on your health insurance plan. The premium paid towards health insurance is eligible for tax savings. However, please note that these benefits can be altered if there are any amendments to the Income Tax Act.
Tax Benefits Through Section 80D
The section 80D of Income Tax provides tax rebates on the premium paid towards your health insurance plan. Be it individual, family floater, senior citizen, or any other type of health insurance plan, you will get tax benefits on all of these plans. Moreover, any add-ons that you include in your plan also qualify for tax benefits.
What is the Total Tax Benefits I Can Get on Health Insurance?
There are two types of tax deductions offered on premiums paid towards family/individual plans as well as a health insurance plan that is bought for dependant parents. Now, let us tell you about the maximum tax benefits you can get on your health insurance plan:
- Individuals who are less than 60 years of age can get Rs. 25,000 in tax benefits
- For individuals who are above 60 years old or are senior citizen, then is such a case tax benefits of Rs. 50,000 is offered
- NRIS can get up to Rs. 25,000 tax benefit if they buy health insurance in India
- For preventive health check-ups, a tax benefit of Rs. 5000 is offered to individuals less than 60 years and Rs. 7000 for senior citizens
Things to Remember While Claiming Tax Benefits on Health Insurance
Some of the things that you must remember while claiming tax benefits on health insurance are as follows:
- If you buy health insurance for yourself, family members, or dependant parents, then you can avail of tax benefits.
- The tax deductions are only available on the premium paid towards health premiums and not on anything else.
- If you pay premiums in cash, then that is not eligible for tax deduction. However, if you choose other modes of payment such as demand draft, or online payment, then you can avail tax benefits.
- The premium paying date should fall in the same financial year in which the policyholder is paying the premium
Factors Affecting Health Insurance Premium
Listed below are some of the factors that affect health insurance premiums:
- Age: The age of the policyholder directly affects the health insurance premium. The more the age, the higher will be the premium, and vice versa.
- Medical History: Policyholders who have pre-existing medical conditions tend to pay higher premiums. This is because such individuals are at a higher risk of health problems and are more likely to raise health insurance claims.
- Policy Type: Another factor that affects the premium is the policy type. For instance, the premium of a family floater plan will be higher in comparison to individual plans.
- Policy Tenure: The policy tenure refers to the duration during which the health insurance plan remains active. This means that depending on the policy tenure, the premium will vary.
- No Claim Bonus: No Claim Bonus refers to the bonus given if you do not raise any claim in a given year. Policyholders with no claim bonus will thus pay lower premiums as compared to others.
So, enjoy tax benefits with your health insurance plan. However, remember to check with your insurer about the inclusions and exclusions before buying any plan.