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Tax Benefits and Health Insurance – 5 Things To Consider

Over the years, our lifestyle habits have changed drastically, and it has significantly affected our health. No matter how healthy or focused routine we follow,
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“The groundwork of all happiness is good health.” – Leigh Hunt – Over the years, our lifestyle habits have changed drastically, and it has significantly affected our health. No matter how healthy or focused routine we follow, there is always a chance of falling prey to external factors that can make us ill.

Now, it’s not just the impact of diseases that has risen a lot; it’s also the cost of treatment whose surge has become a topic of stress. Inflation is making the hospital bills costlier than ever, and we can’t help but worry about the expenses that a sudden medical emergency can strike us with. In such a situation, buying health insurance comes as a great option. It not only provides coverage against expensive hospital bills but also avails tax benefits.

As per the Income Tax Act, if you buy a policy, a deduction of 25,000 per annum is available under Section 80D. There are various other things that you will need to keep in mind to get the most of your online health insurance and tax benefits. Some of the crucial ones are listed below. Take a look!

1. The Limit of Tax Claim

No doubt that health insurance policies avail your tax benefits. However, there is a limit to the claim. Under Section 80D of the Income Tax Act, you can claim tax benefit to a certain limit on the premium paid. The policy, however, can be in the name of your parents, spouse, or children irrespective of their financial stability.

Basically, the amount of tax benefits depends on the age of the insured person. The maximum deduction is Rs. 25,000 per annum when the age of the insured person is below 60. In case, you have bought the policy for a senior citizen; you can avail tax benefit of up to 50,000 per annum as per 2018 Budget.

2. Medical Check-ups

You must have heard that prevention is better than cure. Now, what if we say that those preventive steps come with tax benefits? Seems amazing, right! Let us tell you how.

Along with Rs. 25,000 or 30,000 tax benefits on the premium paid for health insurance, you can get an additional tax benefit of Rs. 5,000 by going for a preventive health check-up. This way, you don’t just keep a check on your health but also ensure money-savings in the process.

3. Cash Payments and Tax

When making the payment for premiums, it is suggested that you avoid paying in cash since tax reduction is not accessible with this mode of payment. As per experts, you should pay via net banking, credit cards, cheque or drafts to qualify for the tax benefits.

However, if you can make cash payments in case of preventive health check-ups. Also, do not forget to save all the receipts to avail of benefits later.

4. Parents’ Policy

For maximizing your tax benefits, try to purchase a different policy for your parents if they are above 60 years of age. However, the only condition that gets added in such a case is that there will be more health check-ups and a comparatively higher premium.

As per the Budget 2018, the Centre has proposed tax benefits under Section 80D of the Income Tax Act and has increased deduction for senior citizens from Rs. 30,000 to Rs. 50,000.

By buying separate health insurance for your parents, you do not just get the chance to earn more tax benefits but also ensure better funds to cover the financial obligations.

5. Exclusions in Tax Benefits

There are certain conditions when you will not be eligible for tax benefits on your health insurance. Here are three of them:

  • Mode of Premium Payments: One can get tax benefits under section 80D only when the taxpayer makes the payment of health insurance premiums. Moreover, the payments must be made via options like online banking, cheque while excluding the cash option.
  • Service Tax: Tax benefits are not applicable to the Service Tax, and Cess Tax levied on the premium payment.
  • Group Health Insurance: You can not avail of tax benefits under section 80D if you have purchased group health insurance plan.

You Can Buy Health Insurance Online

There’s no doubt that health insurance policies and tax benefits go hand in hand. However, you should keep the above-listed things in mind to get the most out of your online health insurance. Some financial institutions like Future Generali also offer a discount when you buy online health insurance. So, do check all the options that help you gain maximum benefits from your health insurance plan.

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