Tips to Save Taxes on Health Insurance Plans

It doesn't matter if you are a salaried individual or self-employed, financial planning is crucial for everyone. It is important to think about the tax that is deducted from our salaries and ways to save it from tax deductions. One of the best ways in which you can enjoy tax benefits is by buying health insurance plans. Wondering how? Here is a guide that will help you understand tips for tax saving with health insurance plans.

Tax Benefits in Health Insurance

As we all know health insurance is one of the most important insurance products that provides financial protection in case the policyholder meets an unfortunate health emergency. In addition to offering comprehensive coverage to ensure your well-being, a health insurance plan provides the benefit of tax savings as well. Tax saving with health insurance plans? Yes, you have got us right! You can save taxes on the premium that is paid towards health insurance plans as specified under section 80D of the Income Tax Act of 1961. This means that if you have health insurance plans, you can reduce your tax liability to a great extent.

What is Section 80D of the Income Tax Act of 1961?

The benefits of health insurance plans cannot be much stated. Thus, to encourage more and more people to buy health insurance plans, the Government of India now offers tax benefits on health insurance plans. No matter which type of health insurance plan you are buying, tax benefits are offered on all plans such as individual health plans, senior citizen health insurance plans, and others. 

Eligibility Criteria to Save Tax U/S 80D 

To be eligible for tax savings under section 80D, you need to fulfill the following criteria:

• To claim tax benefits on health insurance plans, you must remember that this benefit is only applicable to the health insurance premium amount
• This deduction is available to individuals and members of a Hindu Undivided Family (HUF)
• The deduction is applicable for premiums paid on health insurance policies for the taxpayer, their spouse, children, and parents
• Payments through cash are not eligible for deductions under Section 80D

Tips to Maximise Health Insurance Tax Benefits

If you are the policyholder, you can save taxes of up to Rs. 25,000 on health insurance policies. However, you can also maximize this benefit in several ways. Here are some useful tips in which you can maximize your tax savings on health insurance plans:

• Preventive Health Check-up:  Preventive Health check-up means medical tests that are performed to prevent the chances of diseases. As per the Income Tax Act, you can also save taxes on these medical tests, along with tax savings on health insurance premiums. The maximum limit of tax savings on preventive health check-ups is Rs. 5,000.

• Senior Citizen Health Insurance Plans: According to section 80D of the IT Act of 1961, there is a greater tax benefit on senior citizen health insurance plans. While individual health plans let you save tax of up to Rs. 25,000, on the other hand, senior citizen plans offer you an opportunity to save tax of up to Rs. 50,000. 

• Critical Illness Plans: In case you or your loved ones are diagnosed with critical illness, then you can get even more tax benefits. As per section 80DDB of the Income Tax Act of 1961, individuals below the age of 60 years can save up to Rs. 40,000, and senior citizens can save a maximum of Rs. 60,000 if diagnosed with any kind of listed critical illness.

Maximum Limit on Tax Saving with Health Insurance

The limits of exemptions on health insurance plans are as follows:

• An individual who is below the age of 60 years gets a Rs. 25,000 exemption
• If you have a senior citizen health insurance plan, then you can save up to Rs. 50,000
• NRIs, irrespective of their age can get Rs. 25,000 tax benefits on health insurance plans
• Preventive health check-ups offer Rs. 5000 tax exemptions, however, for senior citizens, the maximum limit is Rs. 7000

Things to Remember Before Claiming Tax Benefits on Health Insurance Plans

Listed below are a few things you need to be aware of while claiming tax benefits on health insurance plans:

• You must make the premium payment through digital modes only
• You can get tax benefits for the premium that is paid within the same financial year of the premium payment
• The tax benefit cannot be availed if you do not have receipts of premium payment
• You cannot save taxes if you have bought a health insurance plan for your in-laws or friends
• You need to check the permissible limits of tax benefits as specified in section 80D of the Income Tax Act and accordingly claim tax benefits

Documents Required for Tax Saving On Health Insurance

Some of the documents that you must have while claiming tax benefits on health insurance plans are as follows:

• Premium payment receipts
• Copy of health insurance policy
• Mode of payment details
• ITR form

Take Away

So, what are you waiting for? Reduce your tax liabilities and save on taxes with health insurance plans. You can also explore some health insurance plans on InsuranceDekho’s website and buy the plan that best meets your needs.

FAQs

Q. Can I get health insurance tax benefits?

A. Yes, if you have an active health insurance plan and you are paying premiums, then you can get tax benefits on such plans.

Q. What is the maximum limit of tax exemptions on senior citizen health insurance plans?

A. Senior citizens can save taxes of up to Rs. 50,000 on health insurance plans. 

Q. Can I get tax benefits on preventive health check-ups?

A. Yes, preventive health check-ups, also provide the benefits of tax savings.

Q. Which section of the Income Tax Act specifies tax benefits on health insurance?

A. The section 80D of the Income Tax Act of 1961 specifies tax benefits on health insurance plans.