How Much Tax Can You Save on Health Insurance?
Maximizing Tax Savings with Health Insurance Premiums
Section 80D provides tax relief on health insurance premium payments for self, spouse, children, and parents. These deductions are mainly based on the age of the insured individuals and can help avail significant tax savings if planned correctly.
Wondering how much you can save on health insurance tax deductions under Section 80C?
For Self, Spouse and Dependent Children
●When any of the insurees are younger than 60, a benefit of ₹25,000 per year can be availed.
●When any one of the insurees is more than 60 years old, then a deduction amount of ₹50,000 is applicable.
For Parent's Health Insurance
●Premiums paid for parents' health insurance plans, in case they are up to 60 years old, are eligible for tax deductions of up to ₹25,000.
●In case the parents are above 60, you can avail up to deductions worth ₹50,000 per financial year.
Preventive Health check
●Deductions up to ₹5,000 per financial year are applicable for preventive health checks. Also, this is applicable to check-ups done for the taxpayer, their spouse, dependent children, and parents.
Maximum Tax Deductions You Can Claim
Using Section 80D appropriately, you can avail the maximum deduction up to:
●₹50,000: If you and your family are below 60 years and your parents are above 60 years.
●₹1,00,000: If both you and your parents are above 60 years.
*Excluding ₹5,000 deductions for preventive health checks.
Detailed Savings Illustration
This may be expressed as follows:
●You are 40 years old and spend ₹20,000 a year on health insurance for yourself, your spouse, and your children.
●And ₹40,000 for health insurance for your aged parents.
Tax Deduction Calculation:
●Total Deduction: ₹20,000 (for self, spouse, and children) + ₹40,000 (parents above 60) = ₹60,000
Breakdown of Tax Benefits by Age Group
| Insured Individuals | Maximum Deduction (₹) |
| Self, Spouse, and Children (below 60) | 25,000 |
| Self, Spouse, and Children (above 60) | 50,000 |
| Parents (below 60) | 25,000 |
| Parents (above 60) | 50,000 |
Key Advantages of Health Insurance Tax Deductions
1.Promotes Long-Term Savings: Health insurance tax benefits can help you save on tax payments, facilitating savings in the long run.
2.Motivates Preventive Care: The ₹5,000 deduction towards preventive health check-ups encourages preventive care, which results in diseases getting detected at an early stage.
3.Supports Elderly Care: Tax deductions for parents over 60 years of age help address the medical expenses of the elderly, who are more prone to health risks.
Steps to Maximize Tax Savings
1.Include Parents in Coverage: Pay for the health insurance for your parents, especially when they are older, as it would increase your deduction.
2.Go for Family Floater Policies: It would be cost-effective and tax-efficient to keep the whole family under one premium.
3.Renew Policies on Time: Never allow a lapse of your health insurance policy to continue getting uninterrupted benefits and tax savings.
4.Utilize Preventive Check-ups: Avail deduction of ₹5,000 for health check-ups, whether hospitalization is involved or not.
Additional Considerations for Tax Savings
●HUF (Hindu Undivided Family: You are eligible under Section 80D even if you are a HUF. Premiums for the members of your family can be claimed as well.
●Critical Illness Policies: Premiums for riders for critical illness or separate policies are also tax-deductible.
●Senior Citizen Health Plans: For senior citizen health plan premium payments, one is eligible for a deduction of up to ₹50,000 within a financial year.
Not only is health insurance an investment to secure your financials, but it is also a strategic way of cutting down on tax liability. Choose any health plan from reputed insurers like Star Health and earn savings on both medical expenses and tax deductions.
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