A health insurance plan is necessary these days, especially if you have been working for some years. But, it is essential that you buy a health insurance plan. Since there are multiple benefits of a health insurance plan. The tax benefit surrounding health insurance plans is the most significant and most well-known.
Moreover, it is a crucial investment that provides security to your loved ones in cases of emergencies. Whether it’s a planned hospitalization or an emergency, a health insurance policy will cover you at such severe times.
Other than safeguarding your finances from increased medical expenses, you can avail great tax benefits. These tax benefits are availed on the premium on your health insurance plan by the Income Tax Act, Section 80D.
In this blog, we will share with you about the tax benefits of a health insurance plan. To avail these tax benefits, there are a few documents that are necessary.
Documents Required to Claim Tax Benefits
You should remember that the only documents that you require to claim a tax deduction are the premium payment receipt. Also, with this, you need a copy of your insurance policy which shows the name of all the members of the family, their relation with you, and their age.
In case of premiums that are paid for the parent’s policy, the 80D certificate is asked for; the insurance company issues this by giving the payment details in their name. You can avail great tax benefits with minimal documentation by applying on Future Generali.
While exploring the tax benefits of health insurance, individuals facing financial difficulties should also consider options like https://cleanslatetax.com/irs-tax-forgiveness-program/, which can provide relief through mechanisms such as an Offer in Compromise
The Tax Benefits Through the Income Tax Act
You can buy health insurance plans of your choice quickly and without any stress. It is a wise choice irrespective of age. Also, health insurance schemes are affordable and protect you against sudden medical expenses. Several health insurance plans are available in the market and depending on your needs, you can opt for individual or family health plans. There are a few things under Section 80D that you need to remember. These are
- Tax exemptions are only valid on health insurance premiums and not the additional charges such as service charges, GST, etc. In case the health insurance covers add, then the premium for the add-on is also available for a tax deduction.
- As per the health insurance 80d, the premium is paid in cash, and these are excluded from the clause-tax exemptions. The other modes of payment are cheques, net banking, credit and debit cards, demand drafts, etc., all eligible for tax exemption.
- Tax benefits health insurance are great when it comes to financial planning. Also, the health insurance premium for family insurance plans is low. Family floater plans are the ones covering your partner, dependent parents, and dependent parents and make you eligible for all tax benefits.
Various tax benefits under the Income Tax Act, Section 80D, are dependent on age, such as
- The tax deduction limit depends on the age of the primary policyholder, who is the sole holder of the policy.
- You can easily claim income tax deductions on health insurance policies for individual and family health insurance plans. This includes the plan for dependent parents, where you are eligible to pay the applicable premiums.
- For policyholders less than the age of 60 years. The maximum deduction on mediclaim is Rs.25,000.
- For the ones who are above 60 years, who are senior citizens, the mediclaim maximum deduction limit is Rs.50,000.
- Additionally, HUF(Hindu Undivided Family)are eligible to claim a maximum deduction of Rs. 25,000(for the ones below 60 years) and Rs.50,000(for the ones above 60 years).
- For NRIs, Non-Resident Indians, the maximum tax deduction that they can claim is Rs.25,000, regardless of their age. Also, this is applicable if they buy a health insurance plan for themselves or their parents.
- The allowance given by PHC (Preventive Health Checkup) is only available if the aforementioned mediclaim limits on deductions are not met.
- Moreover, the PHC limit for the ones holding a health insurance policy under the age of 60 years is Rs.5,000 and Rs.7,000 for senior citizens.
- The maximum tax deduction under the Income Tax Act, Section 80D, can be Rs.1,00,000 cash. This is applicable when you buy the health insurance plan or policy for your parents or yourself, provided both you and your parents are senior citizens.
- To avail tax deductions, the premium is to be paid in any other mode than cash. However, Preventive Health Checkups can be done in cash.
- The benefits under Section 80D of the Income Tax Act are in addition to the act’s Section 80 C, which breaks down to Rs.1.5 lakhs.
- Also, the amount reserved for senior citizens’ deductions can be used and spent on medical expenses.
- Even if you pay a premium on the health insurance plan in one go, the tax benefits are available for the entire period of the insurance coverage.
Conclusion
Health insurance plans are a great way of investing in your future and the future of your close ones. Other than safeguarding your wallet from medical expenditures, you can even avail incredible tax benefits on the premium that you pay on your health insurance. This is done under the Income Tax Act, Section 80D. The insurance policy is a beneficial and excellent tax planning tool, making it a wise investment for safeguarding your future.
