pays for your hospital bills for diagnostics, surgery etc.
Health insurance or Mediclaim Policy is intended to provide financial security against any unforeseen expenditure that may arise due to medical emergencies happening to you or your family. The policy saves you from the enormous mental tensions of having to sacrifice one's hard earned savings / assets to meet this unforeseen expenditure. Government of India also encourages Health Insurance by providing Tax Benefit on the Premium paid. This article aims to make you aware about the same.
The medical cost in India has been escalating over the last so many years and has becoming increasingly unaffordable for a growing middle class population. However, fortunately during the same period, the middle class in India has grown in their disposable income and are increasingly willing to spare this disposable income in buying a health insurance policy as they prefer to avert the tensions of financial uncertainty during a medical emergency.
In order to support the middle class and the penetration of health insurance, the income tax act under section 80D provides for tax exemptions on the amount of premium paid towards health insurance. The assessee is allowed a deduction of cumulative premium of Rs 15,000 in case premium is paid towards the health insurance of the assessee, his / her spouse and children. If the assessee is a senior citizen (age above 60), an additional of Rs. 5000 will be allowed as deduction. If the assessee is also buying a policy that covers his parents, then he or she may Claim an additional amount upto Rs 15,000 as exempt from taxable income. If the parents are senior citizens, he or she may be allowed a tax benefit for Rs 20, 000 instead of Rs 15,000. A deduction is allowed irrespective of whether the parents are dependent on the assessee or not. The assessee may be an individual resident / non-resident citizen or foreign citizen or a resident / non-resident HUF. In case of an HUF, the premium paid towards any member of the HUF can be claimed for the purpose of income tax exemption.
If you pay the health insurance premium in cash, you may not be eligible for income tax exemption. Prior to 2009, mediclaim premium paid through cheque were only allowed for exemption, but with the growing use of alternate channels like debit / credit cards, exemption was also allowed for payment done through these alternate channels. If the income of the assessee is not within taxable limits, then obviously there is no exemption that he or she can seek.
In the event you are paying only part of the premium of the health insurance policy, the income tax exemption available to you would be restricted to the amount paid by you subject to the maximum limits. If either of your parents or wife or children is paying the rest of the premium, then they can claim an exemption for the amount paid by them.Premium paid towards health insurance of mother-in-law, female child after her marriage or male child who is employed is not allowed for exemption.
So if you have been procrastinating health insurance decision since long, you now have another reason to go for it. Compare and buy health insurance now and claim tax benefit.