Budget allocation is a challenge for one’s intelligence for sure as your future depends on how smartly you invest in certain things for a healthy tomorrow. Your health insurance is one such a crucial area undoubtedly. Many of the youngsters are reluctant investing in health insurance as they can’t reap the benefits at the earliest time in majority of incidents. Though an insurance policy does not give away an instant benefit, it secures your future. It is the property of money that makes us prioritize on the money making elements rather than the money expending elements. However, financial experts quote that investing in health insurance is money saving against the common misconception that it consumes huge money for less returns. It has a multi-fold effect by securing a healthy life simultaneously saving a lot of money for you. You got puzzled?! But it is the truth! You can save your money by investing in health insurance in the form of tax. So, let’s focus on ‘How to save taxes with health insurance?’
Paying huge insurance premiums may be tough for an average individual at a young age considering the burden of house rent allocation, children’s education, medical bills, fuel and telephone bills, monthly EMIs for house and vehicle loans, ration expenditures etc. Most of the insurance premiums need to be paid annually or bi-annually and these months are threatening for sure. But, one has to remember that the inflation brings a change in your annual income which keeps increasing year on year but the insurance premium rarely changes promising a secured future. The more the income you earn in progressive years, the less the premium amount seems to be. It is not as difficult to pay as it was in the initial years. And what if you can save on taxes by investing in a health insurance policy?
The Income tax act of 1961 states that ‘an investment in medical insurance can get your tax deducted’. The Government therefore implicitly encourages investment in medical insurance to secure the citizens’ health in the years to come. Securing the life of your loved ones is definitely the heaviest price one can pay for considering the unexpected health turmoil’s we are vulnerable to be in. Understand how to save taxes with health insurance and Ways to Save Income Tax with Health Insurance!
- Health screening: Buy a health insurance policy to get a rewarding tax exemption worth Rs.25,000 by expending on preventive health check-ups during the course of your policy. This exemption can go up to Rs.30,000 for senior citizens. Claim an extra benefit of Rs.5000 coverage annually against preventive health check-ups.
- Policy for parents: The income tax act of 1961 under section 80D allows you to get an additional tax benefit if premium is paid for an insurance policy which covers any of your parents. Avail a deduction up to Rs.30,000 per annum. To put it in a nut shell, save this amount for either of your parents if they are senior citizens.
- Use banking modes to get tax benefit: Remember that you do not get Tax Benefits of Health Insurance if you buy an insurance policy with cash. A cheque or a demand draft, net banking, credit or debit cards are inclusive of these banking modes to claim savings on taxes. Although cash is not entertained for tax savings, you can avail savings on your tax if you pay cash for preventive health screenings.
- Health insurance for parents who are senior citizens: The category of very senior citizens who are above 80 years and are not inclusive of any health insurance policy can also save your taxes up to Rs.30,000 per annum if you spend on their preventive health check-up and treatment.
- Critical illnesses: Your insurance policy does so much more than what you think. It not only protects you against critical illnesses but also lets you avail tax savings up to Rs.60,000 for senior citizens and up to Rs.80,000 for senior citizens above 80 years of age. Chronic diseases such as heart disease or cancer can save up to Rs.80,000 of medical expenditure. Spouse, parents, children and siblings including you can avail this benefit.
- If the policy is meant for your ageing parents and yourself, you can reap a total of Rs.55,000 as tax benefits which includes Rs.25,000 for yourself and Rs.30000 for Mediclaim policies for senior citizens.
- You can save a whopping Rs.25,000 as tax deductible even though your parents are not senior citizens and are below 60.
- Avail a tax exemption of Rs.5,000 if you and your dependants (spouse and children) are undergoing precautionary health check-ups.
- You would be happy to know that you can save Rs60,000 totally if you invest in a health insurance policy. Isn’t this a great idea to know how to save taxes with health insurance?
Know the vital areas to get a tax exemption for your medical insurance policy:
- The section 10A of Income tax act 1961 says that employees with the employer providing a Mediclaim policy can save Rs.15,000 on the taxable salary for regular medical expenses for himself/herself, spouse, parents and children. This exemption would be on the medical bills, chemist bills, health check-up bills and the doctors’ consultation fee.
- Section 80D of the Income tax act 1961 exempts a taxable amount of Rs.5000 for precautionary health check-ups which include the investigations held for the policy holder and the family members.
- Specially challenged dependants (spouse, children, siblings and parents) of a policy holder can get the tax exemption of Rs50,000 to Rs.1,00,000 depending on the severity of disability as per the section 80DD of the Income tax act 1961.
- The section80DDB of the Income tax act of 1961 exempts Rs.40,000 to 100,000 for dependents of the policy holder with specified diseases such as AIDS, Cancer, Kidney Failure, Thalassemia or Neurological disorders if they are disabled beyond 40% due to the ailment.
However, do not consider a medical insurance policy to be something which can exempt you from your income tax but it is an intelligent step towards securing a healthy future for you and your family. Undoubtedly, the amount of money you can save by investing in a healthcare policy is not negligible when it comes to saving tax. So, initiate a step ahead and get to know how to save taxes with health insurance.