Health Insurance

How to avail tax benefits in Health Insurance?

In this fast-paced life, we don’t know about what is going to happen next. So, it is better to be on the safer side and have Health Insurance to take care of your family and beloved ones. 

We all have heard about health insurance and must opt for one for our family including parents and kids. Basically, people take health insurance to cover the financial risk in case of medical emergencies. Health insurance has more other benefits that we all must know so that we can avail that benefit. A known benefit that we can take from health insurance is the tax benefit. We all know about taxes that we pay to the government as compulsory financial charges. If you own health insurance policy then you can take a discount on tax-paying. You can avail these 4 types of deductions on taxes as per section 80(D):

  • Tax deduction in the premium of health insurance if you are taking the insurance for you and your family.
  • Tax deduction in the premium of insurance if you are purchasing the insurance for your parents.
  • You will get tax deductions in the expenses of preventive health check-ups.
  • You will get tax benefits on the medical expenditures of super senior citizens.

Criteria to avail the tax benefits:

To get the rebate in tax-paying there are certain criteria that the payer has to follow. Specifically, the premium you are paying for the medical coverage is deducted from the actual income.

  • If in your family none of your parents are more than 60 years of age then the deduction is of Rs 25,000. You pay a premium of RS 25,000 for the health insurance. Then you can claim a total deduction of Rs. 50,000.
  • If either parent in your family is of more than 60 years then you can avail tax benefit of RS. 50,000 for health insurance. You are paying a premium of Rs. 25,000 for your family including your parents, spouse and children. Then you can claim a total deduction of Rs. 75,000 annually.
  • If the eldest member in your family is of more than 60 years either it is you, your spouse or your children, then he/she can make a claim up to Rs 50,000 as tax benefit on health insurance. Additionally, for your parents (more than 60 years) you are getting health insurance up to Rs 50,000 in a tax benefit. So, you can claim a total deduction of Rs. 1,00,000 annually.

Apart from these, if any of your parents are more than 80 years of age (Super senior citizens), then you can avail an Rs.50,000 in a year for medical expenses. This limit initially was of RS. 30,000 but the government has increased this amount to Rs. 50,000 from the financial year 2018-19. Because health risk increases with the increase in age so the people of more than 80 years are at high medical risk.

Exclusions in Income tax act for section 80 D: As per the guideline of the Income-tax Act there are some exclusions. These excluded factors will not be able to avail the tax benefits:

Premium paid in cash: In case the premium holder will pay the premium amount of health insurance in cash then he/she will not be eligible to get the tax benefits.

Group Health Insurance: Group health insurance is basically taken for employees that are working for an organization and covered many families in it. As per the rules of Income-tax act group health insurance is not eligible for getting any tax benefits.

Section 80D of the Income Tax Act also provides some extension: These extensions are provided to pay an extra amount to the policyholder in case of serious illness or any critical disease.

Section 80DDB: This extension will provide an advantage to those who are suffering from any type of serious illness to take tax exemptions up to 2 lakhs Rupees. The list of disease covered under section 80DDB are –

  • Malignant Cancers
  • Neurological diseases of more than 40% disability level
  • Motor Neuron Disease
  • Chorea
  • Hemiballismus
  • Parkinson’s Disease
  • Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
  • Chronic Renal failure
  • Hematological disorders

Section 80DD: This extension is provided to the people having any dependent in the family who is disabled. Under this you can claim up to 75,000.

Section 80U: This extension is beneficial for people who are disabled and unable to do work. Generally, you can make a claim for Rs 75,000, but for severe cases you can also claim up to RS. 1,25,000.

The basic difference between Section 80D and Section 80C: Apart from section 80D, Section 80C in the income tax act will also give you the opportunity to save taxes.

In section 80D, the policyholder will get the tax exemption in health insurance of self, spouse, kids and parents whereas in section 80C you can al=vail various benefits on tax by investment and expenses.

In section 80D you can avail of a maximum tax exemption of 1.5 lakhs whereas in section 80C the maximum limit is 65,000.

How to claim for tax benefit?

If a person wants to take tax benefits then he has to submit the receipt of premium payment and the policy copy on which name of the family members, relation with the policyholder and age of each family member is clearly mentioned.

You can claim the tax benefits by online and offline methods. To avail it online you can apply it on Revenue’s myAccount service. You can also download the Revapp application on your tablet or mobile device to apply online.

In case you want to apply it offline then you have to fill Form 12 (pdf), or Form 12S and post or submit it to the revenue office. To request Form 12 or Form 12S you can call the Revenue department or take a printout of the form available on the website of the Revenue department. On-call you have to provide a name, complete postal address with pin code, the number of forms required and Your PPS number.

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