It is always advised to everyone that better be safe than worry. It applies not just for health but also financial requirements for health. Thus, health insurance, popularly known as medical insurance is an important and mandatory investment in your investment portfolio. To encourage this investment, government provides tax benefits in the form of deduction of the investment made in medical insurance. This tax benefit is over and above of the investments stated under Section 80C/CC/CCD and is claimed under section 80D.
Who is eligible?
An individual or an HUF are eligible to claim deduction from the total income for any amount invested in medical insurance. In case of an individual, medical insurance deduction can be claimed if the policy is taken to cover self, spouse, dependent children and parents.
In case of an HUF, deduction from total income is eligible for any amount invested in medical insurance to cover any member of HUF.
What is the amount eligible for deduction?
An individual can claim deduction upto Rs 25,000/- if the assessee has invested in any medical insurance policy to cover self, spouse and dependent children. The deduction of Rs 25,000/- is also allowed if the assessee has invested in any medical insurance policy to cover his/her parents and the parents are below the age of 60 years. The deduction of Rs25,000/- is increased to Rs. 50,000/- if an individual has invested in any medical insurance policy to cover his/her parents and the parents are above the age of 60 years.
In case of an HUF, deduction upto Rs. 25,000/-, to cover health for any member of an HUF is allowed. Where any member is a senior citizen, such deduction can be claimed upto Rs. 50,000/-
Payment towards Preventive Health check-up
Considering the current lifestyle, a large number of people are incurring expenses towards their health check-up. Thus a taxpayer is entitled to claim a deduction upto Rs. 5,000/- from the total income if any such payments and made. However, such deduction is available within the overall limit as prescribed under Section 80C i.e. Rs 25,000/- or Rs. 50,000/- as the case maybe. This deduction can be claimed for self, spouse, dependent children and/ or parents.
Investment in Single premium policy
Many health insurance policies have been introduced where an investor has to make a single lump sum payment at once for a policy which is covered for more than one year. In such cases, a taxpayer can
claim a deduction of an appropriate amount. Such amount is arrived at by dividing the amount of single premium paid by the number of years of the policy. Such appropriate amount arrived at cannot exceed the limit of Rs. 25,000/- or Rs. 50,000/- as the case may be.
Other Points to Consider
a. Investment for health insurance should be made in schemes which are approved by central government or IRDA.
b. Payment towards medical insurance should be made in any mode other than cash.
c. Payment towards preventive health check-up can be made in cash.
d. Investment made in health insurance policy for brother, sister, grandparents, uncles, aunts and any other relatives are not eligible for deduction.
e. Premium paid on behalf of working / independent children is not eligible for deduction.
Thus, investment in health insurance policy proves to be a win-win investment for taxpayers as government encourages such investments by providing tax benefits towards it. Hence, every tax payer should invest in health insurance policies as this not only covers the risk of health related payments but also saves tax.
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