Are you debating the pros and cons of health insurance? Struggling to understand exactly how much tax Section 80D lets you save? Not quite sure if health insurance is a worthwhile investment to make? Don’t worry, we’ll solve all those doubts buzzing inside your head.
Health insurance is like a gift within a gift within a gift; it offers you unending benefits. In times of medical contingencies, it saves you from burning a hole in your pocket, offers you the convenience of immediate cashless treatment in hospitals and covers the expenses incurred before and after hospitalisation.
That is not all. The second major advantage of buying health insurance is that it helps you save tax and have a higher take-home pay as a result. Who doesn’t want that?
Let us understand the significance of the two benefits of getting your health insured.
BENEFIT #1: SECURE YOUR HEALTH AND FINANCES
More than 80% of health-related expenditures in India are made out-of-pocket. Both rural and urban areas rely heavily on their savings, and to a considerable extent, on borrowed money, to fund medical treatment. Hospitalisation costs, including operating theatre charges, surgery costs, blood, anaesthesia, medicines, room rent as well as diagnostic charges and post-hospitalisation OPD expenses can all contribute to a hefty medical bill.
In such a scenario, you would like best-in-class medical treatment but, at the same time, wouldn’t want your savings to dwindle, to have to borrow money or to liquidate your assets.
This is where health insurance comes flying to the rescue like your favourite superhero. It allows you quick cashless treatment when most needed, reimburses your expenses and may provide emergency ambulance cover and daily cash during your stay in the hospital too.
BENEFIT #2: SAVE TAX
We all want to save tax and health insurance is one of the most beneficial investment options to do that.
Under Section 80D, Income Tax Act 1961, you can claim a tax deduction on the premium you pay towards a health insurance plan up to certain specified limits for different case scenarios.
The premium is tax-deductible if it is paid using any payment mode, other than cash, for your family, which may include yourself as the proposer of the policy, your spouse and/or your dependent children.
You can claim additional tax deduction for the health insurance premium paid on behalf of your parents’ health insurance policy.
There exist four possible scenarios in which you can claim a tax deduction.
You pay health insurance premium for your family. None of you is 60 years old yet.
You can claim up to Rs. 25,000 as a tax deduction on the premium paid.
You pay health insurance premium for your family. Either of the insured is 60 years of age or older.
You can claim up to Rs. 30,000 as a tax deduction on the premium paid.
You pay health insurance premium on behalf of one or both of your parents. Neither of your insured parents is 60 years of age or older.
You can claim up to Rs. 25,000 as a tax deduction on the premium paid in addition to any tax deduction you may have claimed under any other health insurance policy for your family.
You pay health insurance premium on behalf of one or both of your parents. Either of your insured parents is 60 years of age or older.
You can claim up to Rs. 30,000 as a tax deduction on the premium paid in addition to any tax deduction you may have claimed under any other health insurance policy for your family.
You can refer to the following table to know the maximum tax deduction limits under Section 80D that you can claim in varying situations.