Health Insurance and Income Tax: Learn to Save

Health insurance aka Mediclaim awareness is still catching up with many people in India. With medical inflation running in double digits annually, health insurance is a must buy for everyone irrespective of age and life stage. Health Insurance is often ignored by young professionals and their attitude towards health insurance has been seen somewhat complacent. Young professionals don’t see the importance of health insurance and give a cold shoulder when they are recommended to get one. Most of us don’t appreciate the need for a health insurance unless we or our near and dear ones get in financial crises due to sudden hospitalisation.

Finally, health Insurance has begun to gain little bit popularity now amongst young salaried office goers due to the compulsions of their working lifestyles. Fierce competition of corporate environment, long working hours, unhealthy food habits, no exercise, continuous stress and bad habits such as smoking and alcohol are becoming the trend of working professional’s lifestyle today. These circumstances have made young salaried professionals victims to the lifestyle-related disorders and medical conditions. This is relevant to both male and female professionals.

Today, it is absolutely important that young professionals both males and females understand the health insurance product better and secure themselves against any medical emergencies. Health insurance not only provides coverage against expenses related to medical emergencies but also offers splendid tax benefits as a big added advantage. Government of India on realising the importance of health insurance has given tax benefit on premium payment on health insurance to encourage citizens to have a health insurance policy.

The premium which we pay for the health insurance policy can be used to gain the tax benefit from the total taxable income under section 80D of the Income Tax Act, 1961. Section 80 D of the Income Tax act, 1961 provides for tax deduction from total taxable income on the health insurance premium paid by an Individual. The act provides tax benefit for any payment made to purchase or renew a health insurance policy for self, spouse, senior citizen parents/ dependent parents and dependent children.

The total tax-deductions which can be claimed as income tax benefit on taxable income by an individual at the time of filing of income tax return would depend on the age of the person insured. An individual who is below the age of 60 and parents are also below the age of 60 can avail maximum deduction of INR 50,000. An individual who is below the age of 60 but parents are above the age of 60 can avail maximum deduction of INR 55,000. If the individual and the parents both are above the age of 60, a tax deduction of INR 60,000 can be availed. Medical test deduction forms part of the above-mentioned limits. These deductions can be made regardless of the fact whether parents are dependent on their children or not. Even if they have a health insurance policy, an individual can still claim tax benefits for the contribution made towards their health insurance policy.

Before making a tax benefit, it must be noted that the premium payment has to be done either through a cheque or credit card in order to claim tax deduction. The health insurance premium that you pay must be from the taxable income applicable for the year.

With the fastest growing economy tag, health care situation in India is extremely poor. The Indian government spending on healthcare as a percentage of GDP is low in comparison to most developed and developing countries. Medical inflation annually is making good health care beyond the reach of many citizens of India. Much of the health care spending in India is from people’s own pocket and sometimes it also results in debt and financial crises.

Considering this poor condition of the health care system it is high time for government to ensure further penetration of health insurance. Government should catch up with the inflation of Indian healthcare sector and accordingly update exemptions limit under the section 80D. This will help to improve much needed health insurance awareness and penetration in India.

Read here to know more : https://www.coverfox.com/health-insurance/articles/tax-deduction-on-health-insurance/

I am an expert writer in Insurance Industry and have knowledge about various insurances online like Car Insurance, Two-wheeler Insurance, Health Insurance.