Health insurance is a must-have that can save you money in the long run.
Preventive healthcare check-ups for yourself, your spouse, and your children are covered by insurance premiums that can be claimed as a deduction of Rs 25,000 under section 80D of the Income Tax Act.
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If you and your parents are above 60, you can generally save up to Rs 1 lakh on health insurance premiums. However, did you know that you and your spouse can save even more money on health insurance premiums than the Rs 1 lakh limit (provided you and your spouse have separate taxable income)?
In addition, if your parents are senior citizens, you can deduct up to Rs 50,000 from your income if you buy health insurance for them. If you do it this way, you can save up to Rs 75,000 in taxes.
You can obtain an additional Rs 25,000 deduction if your parents are under the age of 60. Resulting to which you can deduct up to Rs 50,000 from your tax bill if you get health insurance.
If the policyholder and their parents are over 60 years of age, they are eligible for an additional Rs 50,000 deduction. As a result, the policyholder is eligible for a maximum deduction benefit of Rs 1 lakh in this situation.
Also read: How To Save Tax Under Section 80C
How can you get the most out of your entire family's income in terms of tax benefits?
If your spouse works, they can deduct up to Rs 50,000 from their earnings by buying health insurance for their parents. This way, your spouse can contribute to lowering their taxable income and, as a result, the family's overall tax burden.
According to Rajat Mohan, a partner at AMRG & Associates, if a taxpayer is a married woman, she can purchase a health insurance policy for herself, her husband, children, and parents and claim a deduction for the premiums she paid for them". As a result, you and your spouse can acquire separate health insurance policies for your family and respective parents, claim deductions under section 80D, and save more tax on your whole family's income," Mohan explained.
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If you're a single parent, can you get the maximum deduction?
If one of the insured parents dies, the other parent can continue the policy. In this case, the policyholder is eligible for a tax deduction based on the actual premium paid.
Quickinsure Insurance Brokers CEO and Founder Anand Shrikhande stated: "You can keep renewing the insurance with one parent and claim the premium as paid for them, which will be the real premium paid or Rs 50,000. (whichever is lower). The policy is cancelled when one of the members/parents dies, but the other member/parent remains covered."
What you should know if you're a policyholder
It's crucial to remember that you should always seek counsel from a qualified/registered financial adviser before purchasing health insurance. "Health insurance shouldn't be bought primarily for tax savings," said Amit Chhabra, Head-Health Insurance.
Also read: 10 Income Tax Planning Tips for Salaried Employees
Exemptions under Section 80D of the Internal Revenue Code
Take a look at Section 80D of the Income Tax Act's exclusions:
Premium Payments: Only the taxpayer should pay health insurance premiums to qualify for tax advantages under section 80D. If a third party pays the premium, the taxpayer is not eligible for the deduction under section 80D. Furthermore, taxpayers will not be eligible for tax benefits if premium payments are made in cash.
Tax Benefits on Service Tax and Cess Charges: Taxpayers are not entitled to any tax benefits on service tax and cess charges assessed on premium payments. Service tax is levied on health insurance premiums for the uninsured, and the amount due is equal to 14% of the premium health insurance.
Group Health Insurance: Under Section 80D of the Income Tax Act, group health insurance policies do not qualify for tax benefits. However, if taxpayers want to expand their group coverage by paying a higher premium, they can deduct the difference under section 80D.
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