How To Save Tax With Health Insurance?
Updated On Feb 20, 2022
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Are you excited to purchase health insurance? Do you think health insurance is one of the greatest methods to protect your loved ones' health and savings? If that's the case, there's some excellent news for you! You may also save money on your health insurance by avoiding paying taxes. If you're new to the scene of health insurance, remember that the premiums you pay for coverage qualify for a tax exemption under Section 80D of the Internal Revenue Code. The benefit applies to health insurance premiums paid for yourself, your spouse, your children, and your parents. It is important to note that if the child or parent are dependents or not makes no impact.
Investing in health insurance might help you save money on taxes. Here are some crucial things to consider when purchasing health insurance for tax planning purposes. Tax preparation is an important aspect of financial planning, and it must be done correctly to achieve the dual goal. To understand more about saving taxes with health insurance, read on.
What Are The Limits Set For Tax Benefits?
Following are the limits set for tax benefit restrictions that a person should look out for before starting to use tax-saving solutions in health insurance -
1. The maximum deduction on health insurance premiums spent for oneself, partner, kids, and parents is Rs. 25,000 per year, provided the individual is under the age of 60.
2. The highest amount that an individual can pay for a coverage that covers his or her parent (senior citizen aged 60 or more) is Rs. 50,000. Overall, if a taxpayer is under the age of 60 and his parents are over the age of 60, the most tax benefit is Rs. 75,000.
3.Taxpayers aged 60 and over who are spending the premium for their parents are eligible for a maximum tax credit of Rs. 1 lakh.
What Are The Legal Ways To Save Taxes Through Health Insurance?
Following are the important aspects listed that can assist a person lawfully in saving taxes without fear. You may take advantage of tax benefits based on your unique needs and circumstances by as follows -
1. Preventive Health Checkup - Preventive health examinations might help you save money on taxes. You can save an extra income tax advantage of up to Rs. 5,000 based on your preventative health check-up charges during the insurance period. According to Section 80D of the Income Tax Act, the tax exemption limit for those under 60 years is Rs. 25,000 and Rs. 30,000 for senior citizens.
2. Health Insurance For Parents - If you pay the premium for a health insurance coverage that covers your parents, you can get a tax break under Section 80D of the Income Tax Act of 1961. Remember that any of your parents who are 60 years or older can save up to Rs. 50,000.
3. Policy Premium Payment Mode - Every health insurance policyholder should be aware that in order to receive a tax advantage, they must pay their premiums via a demand draft, credit card, debit card, or net banking. The use of cash to pay for health insurance premiums may prohibit you from receiving benefits. Expenses for preventative health check-ups that are paid in cash, however, can be deducted from your tax liability.
4. Other Ways - You can also use Section 80DDB to deduct the cost of a critical illness coverage. For critical illness treatment, the insured is entitled to a tax deduction ranging from Rs. 40,000 to Rs. 80,000. Under Section 80DD, you can also deduct the cost of caring for a disabled dependant. In this situation, the insured is entitled to a Rs. 75,000 discount. A person with a handicap can also save money on taxes using Section 80U. A deductible of Rs. 75,000 or Rs. 1.25 lakh is available to a disabled individual (in severe cases). Section 17 of the Internal Revenue Code allows you to deduct medical expenses from your tax liability. A deductible of up to Rs. 15,000 each financial year would be available to you.
Now that you're aware of the tax benefits of health insurance, figure out what's possible for you or which conditions you meet. While you're about it, keep in mind that you won't be able to claim tax benefits for an insurance premium paid for siblings.
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.