How Health Insurance Saves Tax?

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Today the cost of medical expenses are sky-high and it has been nearly impossible to cover this cost with your savings only. So, the best possible way to secure your family and cope up with the medical cost is going for a health insurance.

A health insurance provides medical coverage to you and your family and moreover it helps in tax deduction. Isn’t that exciting? So, you can easily save tax and secure your family’s health with  financial guarantee. A dual benefit for you. You don’t have to disturb your savings to cover any medical cost.

Health insurance provides tax deduction under Section 80D. Not only you but your family including your spouse, children and dependent parents will be benefited by health insurance against the premium paid to the insurance company.

Who are eligible for 80D?

  • Any individual who is paying premium for his own, spouse, children and dependent parents.
  • If you are contributing to Central Govt Health Schemes or CGHS for your own or your family.    

Now lets have a look on the total deduction which can be claimed under 80D-                                                                                                                               

Total Members InsuredTotal Amount Deducted    
You and your family          Rs. 25,000         
You and your family+dependent parents          Rs. (25000+25,000)= Rs. 50,000         
You and your family+dependent parents (senior citizen)          Rs. (25,000+50,000)= Rs. 75,000         
You (senior citizen) and your family+dependent parents (senior citizen)          Rs. (50,000+50,000)= Rs. 1,00,000         
  • If you are paying premium for self, spouse and children, then you can claim maximum tax deduction up to Rs. 25,000.
  • Along with this, if you want health insurance for your parents, you need to pay additional premium. If your parents are not senior citizens,     then tax deduction will be up to Rs. 25,000. So, your total tax deduction for yourself, family and parents will be up to Rs. 50,000.
  • If your parents are senior citizens, the tax deduction will be Rs. 50,000. So, the total deduction amount will be Rs. 75,000.  
  • However, if both you and your parents are senior citizens, then the total deduction amount will be Rs. 1,00,000.   
  • For preventive health check-ups, you can claim tax deduction up to Rs. 5000, within the limits mentioned.    

Important points to remember

Here are some important points that you must consider for health insurance-   

  • Health Insurance secures your family at the time of any medical emergency. Additionally, it helps in saving tax which is an added advantage.
  • With health insurance, you don’t have to disturb your savings which you have saved for your future financial goal.   
  • You can easily claim coverage for preventive medical check-ups.   
  • Under Section 80D, you can claim tax deduction for critical health insurance and health insurance riders policy against the premium paid.       
  • If you pay the premium for health insurance through cash, you won’t have any tax benefit. You need to pay the premium through demand draft, net banking, cheque or other banking modes to enjoy the tax benefits.       
  • You can get a tax deduction under section 80DD if any of your dependent family member is disable. For severe disability, the tax deduction amount will be much higher.   
  • Under the medical allowance, if your employer pays with your salary for you or your family you can get tax benefit up to Rs. 15,000 per     financial year.   
  • Under Section 80D, you can pay lumpsum premium in a single year where the policy is valid for more than one year.       
  • Under the Single Premium health insurance policy, you can claim deduction which is equal to the appropriate fraction of the amount, If you divide the lump-sum premium amount paid by the number of policy years, you get the appropriate fraction.

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