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How to plan your tax savings on your health insurance premium 2018?

19 February 2018 No Comment

There are various financial products offering tax benefits that can be claimed at the end of each fiscal year. Did you know that Health Insurance provides many other extensive advantages, besides just health coverage? Well, your insurance policy too can help save tax, and fetch the returns you yearned for. Therefore, a health insurance is a must-have in one’s portfolio.

A health insurance company provides health insurance policies in order to clear your medical expenses and hospital bills. A certain amount of sum is chosen by the policyholders to be insured, which the insurance company is liable to pay. The policyholder has to pay a nominal amount known as the premium regularly towards the sum insured, as agreed upon by the insurance company.

If we talk about 2018, then the Union Budget of 2018 has come up with the increased deduction limit from Rs.30, 000 to Rs.50, 000 under section 80D of the income tax for the senior citizens. It is the deduction that is used to diminish your tax liability. More or less, it is a reduction from your total income, and the left after is termed as your taxable income.

Let us have a peek into the essential ways of availing the tax benefits on both your health insurance and medi claim policies under the section 80D of Income Tax.

Claim your deductions under the following conditions:

  • Private Health check-ups: Section 80D of the Income Tax Act envisages that an individual can claim his/her payment made towards:
  1. Health Insurance Premium paid by an individual at regular intervals of time
  2. According to any of the schemes lay down by the Central Government.
  3. Amount paid by an individual for his/her premium check-ups.
  4. Medical Expenses incurred by an individual.
  5. HUF (Hindu Undivided Family) for a senior citizen, if he/she has no health insurance cover.
  • Disabled Dependents: According to the section 80DD of the Income Tax, an individual can claim deductions incurred in the maintenance of a disabled dependent. The deductions encompasses the following scenarios:
  • Expenditure on treatment, rehabilitation and training of the disabled dependent.
  • Amount deposited under a LIC (Life Insurance Corporation) scheme.
  • Treatment of Diseases: In accordance with the section 80DDB of the Income Tax, a taxpayer can claim the deductions if the expenditure is incurred in the treatment of a particular disease.

Deductions that can be avouched:

  • Under Section 80D
  1. For the payment of a preventive health check-up or health insurance premium, a maximum of Rs.25000 can be claimed. In case of HUF, the premium amount that can be claimed is Rs.30000, if the medical expenditure incurred is for a senior citizen who has no health insurance cover.
  2. Under any scheme notified by the Central Government of India, a maximum of Rs.25000 can be claimed.
  • Under Section 80DD
  1. If expenditure is incurred on a disabled dependent, then a maximum of Rs.75000 can be claimed.
  2. If the disabled dependent is suffering from a severe disability, then a maximum of Rs.1.25 lakhs can be claimed.
  • Under Section 80DDB
  1. The actual amount incurred in the treatment of disease or Rs.40000, whichever is less can be claimed.
  2. In the treatment of a senior citizen, an amount of Rs.60000 can be claimed.
  3. A um of Rs.80000 can be claimed for the expenses incurred in the treatment of a very senior citizen.

The Focal Points:

  • Deductions can only be claimed if the mode of payment is other than cash.
  • A senior citizen in India is between 60-80 years old.
  • A very senior citizen in India is above 80 years of age.
  • Total amount claimed for preventive health checkup cannot exceed Rs.5000.
  • Issued by a medical institution, the taxpayer should have a copy of Form no 10-IA in case of Section 80DD.
  • The taxpayer should have a copy of Form no 10-I issues by a gazette doctor in case of Section 80DDB.

 

CONCLUSION

Whether it is a life insurance or a health insurance, buying an insurance policy helps you save money on the income tax. A health insurance policy not only saves your tax, but also covers all the medical expenses incurred during hospitalization and emergency. So, it is very much important for you to do a thorough research before buying any health insurance plan, because access to health insurance is a tremendous payoff.

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