Is your health care Insurance Plan helping you Save Tax?
A salaried person is always on a look out to save taxes. Rightfully so, as tax saving is an integral part of long term financial planning. There are 3 major ways to save taxes in India, namely- term insurance policy, life insurance policy and health insurance policy. Although life insurance is still the most preferred insurance plan that people in India take up for tax benefits and financial security, many individuals are realizing the importance of health insurance policies, a trend which is slowly catching up in urban centers of the country.
In face of the rising health cost, health insurance in India is absolutely mandatory. A single case of medical emergency can cost thousands of rupees, leaving a big dent on your savings and finances. Therefore, to prevent out of pocket expenses, health insurance cover is a sound investment that helps you take care of expenses incurred during a medical emergency, at the same time helps you save tax.
The section 80 D of the Income Tax Act is dedicated to tax savings from your health insurance plan. Health insurance premium paid for self, spouse, dependent children or elderly family members are subject to tax deductibles. For the fiscal year 2016-2017, tax deductibles from medical insurance are applicable for the following scenarios:
- If no member of a family is above the age of 60, including self, spouse, dependent children or parents (dependent or otherwise), the maximum tax deductible limit under 80D that one can get is Rs 30,000.
- If members of a nuclear family(self, spouse and dependent children) is below the age of 60, but parent (mother and father) is above the age of 60, the maximum tax deductible limit under 80D that one can receive is Rs 25,000.
you want to get maximum tax benefits from your health insurance plan , you must keep note of the following points:
- Avoid paying the premium of your health insurance through cash; otherwise you will not be able to avail tax benefits for your health cover. You can pay the premium amount via cheque, draft, credit card or net banking. This is primarily to ensure the accountability of your payment.
- Tax benefits from health insurance are applicable to only individual policies or family floaters and not group insurance policies.
- Make timely payment of premium for your health insurance policy as tax benefits are not extended to lapsed policies.
- Children above the age of 18 who are employed cannot be covered under the health insurance plan. However, there is an exception to the rule for male, unemployed children up to the age of 25 and female children if unemployed can be covered till she is married.
- Women paying insurance premium for her parents can claim tax deduction; however, the same is not applicable to men who are paying the premium for their in-laws.
- Health premium paid on behalf of siblings cannot be claimed.
If you have bought the health insurance policy for the first time, make sure that you submit the premium paid certificate as investment proof to your employers at the start of the financial year. Make sure that you do this in advance to avoid last minute confusion. HDFC ERGO’s Health Suraksha Plan is a great start for first time health insurance seekers, who need comprehensive health insurance policy for themselves and their family.
One must remember that a health insurance, India plan should be one that not only help you pay your medical expenses, but at the same time assist you at save substantial amount of tax. To get the maximum benefit out of your health insurance plan, it is relevant that you take up the policy at the beginning of the fiscal year. This exercise will help you devise a suitable tax saving plan.
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