How to avail tax benefits in Health Insurance?

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.

What is Insurance policy?

Insurance policy

Every person works hard to earn money so that he can arrange a house, feed his family, start a business, buy a car or other costly items for use. After spending so much money on a costly thing, if it gets damaged then your whole earned money will go in vain. To save yourself from this financial risk you can take an Insurance Policy. The insurance policy will provide compensation for your loss. You have to deposit a small amount of money in the company and at the time of loss it will handle your expenses or provide compensation for the expenditures. You can ensure your shops, house, building, car, bike, mobile phone and all other things that you have purchased for money. All the movable and non-movable things available on the earth can be insured.

How many types of insurance policies are there?

You can find insurance policy for each and every item you are seeing near you whether it is any living thing or non-living thing. There are mainly two types of insurance  

Life insurance policy: Under this policy, the insurance company will insure your life by taking a small amount of money annually. As you all must have heard the proverb “If there’s life, then there’s the world”. So according to this, life is the most important thing anyone can have whether it is the life of your parents, wife, children or yours. Death is uncertain and having life insurance will provide financial security to the family of the policyholder after his demise. These are two types of life insurance:

  1. Term Life Insurance Policy: In this you will get coverage for a specific period of time. If the insured person dies when the policy is in active state, then only you will get the benefit of term life insurance.
  2. Whole Life Insurance Policy: In this you have to pay a premium till your death and after your demise, your family can claim for the benefits of the policy.

Whole life insurance policy is much better and costly than the term life insurance policy. The premium of the policy depends on the age, health and gender of the person. For females the premium amount is low and they can afford to pay that easily. 

Non-life insurance policy: All the non-living things are covered under this policy. Non-life insurance policy includes health insurance, car insurance, shop insurance, liability insurance, travel insurance, business insurance, social insurance and the list is too long. This insurance will provide the coverage for damaged property, reimbursement of hospital expenses or the cost of repairing charges.

What are the common non-life insurance policies available in the market?

  • Health Insurance: Medial emergence can happen with anyone as it is not predefined. Health insurance will take care of your medical expenses if you fell ill or go through a serious disease. It will pay the bills of your hospital, medicines, room rent, ambulance charges and surgery charges. Health insurance also covers your critical illness and long-term diseases, such as diabetes, cancer and Tuberculosis. Many companies also provide the facility of cashless treatment in-network hospitals.
  • Auto Insurance: This insurance basically provides security to your car, bike, scooter or any other vehicle from damage. The damage may be caused due to any natural disaster, accident, riot or burglary, it will protect you from the expenses of repairing. Apart from this, auto insurance will also pay for the medical bills if someone gets injured due to that accident. It will also protect you from litigations and penalties.
  • Accidental Insurance: You are walking on the road and suddenly a car hits you, then you should have to go to the hospital for taking first aid in case you get some minor injuries. But it might be possible that any serious injury can happen. So, at that time accidental insurance will help you in paying the hospital bills. As it is insurance with a low premium, so it has its limitations and clauses which the policyholder has to follow. Certain types of major accidents are excluded from this insurance, as it will cost too much according to the premium.
  • Home Insurance: Home is among the most vital things that a person could need for shelter. If something will happen to your house then it will create a major problem for you to search for a shelter for too long. This insurance will provide you financial security if your home is damaged due to burglary, fire or any natural disaster like flood, cyclone and hailstorm. The insurance company will also provide the expenses for the interiors and electronics items as per the availed coverage.
  • Business Insurance: This insurance is taken by the people who are running a business and provide employment to others. In this insurance you can insure your property, machinery, employees related risks, fall in business due to the operating environment of the business or factory.

What is the procedure for insurance to work?

The insurance company is just like a bucket where people can put their money on a regular basis. So that if any mishap happens with anyone then they can withdraw a limited amount of money to manage their financial loss.

The mishap can be with your home, shop, business, car or any other thing. You can only take money from the bucket for the predefined cause that is mentioned in the contract and not for any personal cause.

The insured person has to claim the reimbursement with the images of damaged property or death certificate in case of life insurance and other related documents that are mentioned in the clause. The insurance company will also investigate the claims whether they are genuine or not.

In what cases you will not be able to take successful claims?

At the time of purchasing any insurance policy you have to provide correct information to the company. It will help you with successful and hassle-free claim settlements. If you will provide the wrong information and it further gets detected by the insurance company at the time of investigation then it may cause a problem for you. The insurance company can also take a legal step on you for forgery and providing bogus information.

How To Identify The Best Health Insurance Plan?

choose best health insurance plan

Health insurance is the best way to provide security to your family from unplanned medical expenses. You have to pay your hard-earned money in medical bills when someone in your family has to admit in the hospital due to serious illness or some disease. There are lots of health insurance companies in the market, offering various schemes. With all of them, you have to pay money to buy an insurance plan but its completely depend on your requirement and choice that from which company you want to bur and for how many peoples. To choose the best health insurance plan available in the market you much compare the facilities and advantages online.

The best Health insurance must have these features for sure:

  1. Online process: From the purchasing of the insurance until the claim settlement, the complete process bust be online and hassle-free. No hard copy is required at the time of settlement.
  2. 0% co-payment: Thins verifies that you don’t have to pay a single penny at the time of claim settlement.
  3. No capping on room rent: You can take any private room (having high charges) and the complete bill will pay by the insurer.
  4. Vast hospital network: You can easily find any collaborated hospital near your location so that you don’t have to take to the patient through a long way to reach the network hospital.
  5. Advance cash benefit: You will get a pre-approved claim in cash before the treatment started.
  6. No claim bonus: It will increase somepercentage to yoursum insured if you don’t make any claim for a year and can be increased gradually if not claimed for multiple years.
  7. Complete coverage provided: Insurance plan must provide complete coverage of the hospitalization including, medicines, OPD, maternity benefits, transportation charges, surgery cost, and other things.
  8. Fixed premium cost: Make sure that the insurance company is not increasing the premium every year by applying any extra charges to the premium.

If you think that you don’t need a health insurance plan, then it is wrong. Like everyone, these days must need this to get themselves financially strong when it comes to medical expenses. Here are another few reasons due to which you need it positively:

  • These days we all are living a Sedentary lifestyle and due to this 61% of hospitalizations cases are reported.
  • Medical bills in Heart diseases are too high to bear and can cause instantly.
  • Pollution in metropolitan cities leads to a rise in respiratory disease.
  • Cancer patients are increasing day by day due to their casual lifestyle.
  • Accident rates are too high in India, that also cause medical emergency many times.
  • Medical treatment is unaffordable due to high inflation rate.
  • A medical emergency can happen anytime and health insurance makes sure that it doesn’t hit your savings.

Apart from these private health insurance companies, there are some schemes run by the government of India to provide financial stability to the weaker section of the society. 70% of the population in India are middle-class families and will not be able to pay a high amount of premium yearly. Under these government schemes you have to pay a low amount yearly and can take advantage of Mediclaim at any hospital.

  • Rashtriya Swasthya Bima Yojana (RSBY): For this government charge 30 rupees per person and you can take a medical cover up to Rs. 30,000. Ministry of Labour and Employment launch this scheme for the families below the poverty line. 
  • Pradhan Mantri Suraksha Bima Yojana: Under this scheme, if your family is economically weak and someone dies in your family then you have to pay an affordable premium and can take financial compensation from the government.
  • Central Government Health Scheme (CGHS): This scheme was initiated in 1954 and since then it provides wide-ranging healthcare services to the central government employees, pensioners, and dependents.
  • Aam Aadmi Bima Yojana (AABY): This scheme was launched in 2017 to provide health insurance to rural landless peoples. Under this scheme beneficiary should be of 18 to 59 years of age and the family of the beneficiary will receive Rs.30,000 in natural death, Rs.75,000 in accidental death or permanent disability, and Rs.37,500 on partial disability.
  • Janashree Bima Yojana (JBY): This scheme was launched in 2000 to provide medical insurance for the BPL families to fall under 45 occupational groups.
  • Employment State Insurance Scheme (ESIS): This scheme will pay for the medical expenses of employed individuals and their families from day one. This is a social security initiative featured for providing socio-economic security to the working class.
  • Universal Health Insurance Scheme (UHIS): Under this scheme, you have to pay Rs.200 for individual, Rs.300 for a family of five-member, and Rs.400 for a family of seven-member. Beneficiaries will receive accidental death cover up to Rs.25,000 and medical expenses up to Rs.30,000. This scheme was implemented for underprivileged families to take better and improved medical facilities at low prices.