Everyone knows that in these times of growing medical inflation and rising health care costs, how much a health insurance policy is necessary covering each and every member of our family under its protection umbrella. The cost of even one event of hospitalization for any family member can wipe out the hard-earned saving of many years and in some serious medical cases can cause a severe financial stress to the family.
We also know that in developed countries of America and Canada, Europe etc there provided is a very well managed and defined state provided social security system that provide better health care facilities and health insurance covering all the citizens.
Although the government of India has now come up health insurance schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana which is a part of ambitious national health policy of GOI providing a medical cover of 5 lakhs per family per year to the bottom 40% of poor and vulnerable population of India.
Unfortunately, in our country there is no such healthcare and medical insurance facilities provided by the government for all category of citizens and hence as an effort to promote taking of individual and family floater health insurance policies, GOI has introduced provisions in form of tax rebates. In the current article we will discuss what all these tax provisions are and how to claim them.
Section 80 D of the Income Tax Act –
Every individual or HUF (Hindu undivided family) taxpayers can claim a deduction for the health insurance premium amount paid out of their income.
The taxpayer or HUF may be resident or non-resident. As section 80 C makes a provision for tax benefits for various investments including life insurance premium, the biggest relief provided under 80 D that the deduction claimed is over and above any deduction claimed under sections 80C, CCC, CCD.
Below we discuss the quantum of deduction available for Financial year 2019 – 20 and assessment year 2020 – 21.
- Individual taxpayers upto 60 years of age are eligible for tax deduction upto 25k per budget year for health insurance premium paid for Self, Spouse and dependant children. If age of the taxpayer and/or spouse is more than 60 years the limit of deduction goes upto 50k. Point to note is medical premium paid for health insurance of any sibling or other relative will not be eligible for tax deductions under this section.
- In addition to above mentioned there is an additional deduction of 5k available to be claimed for expenses of preventive health check up for self, spouse and dependent children.
- Medical insurance premium paid for covering parents both being below 60 years of age is additionally eligible for tax deduction upto 25k per financial year. If any or both parents are above 60 years of age i.e. in the senior citizen category the limit of deduction goes up to 50k.
- Additionally, 5k can be claimed for deduction for parents’ annual health check-up.
The above limits provided are only the maximum limit available and the actual amount of deduction will certainly depend on how much you actually spend under the categories mentioned above in payment of health insurance premium or preventive health check-up costs.
The above points mentioned are for category of individual taxpayers and for HUF the total deduction limit for premium payment is 25k. Below are few more important points to be considered on tax saving aspect by payment of health insurance premium or other health expenses incurred.
- Health insurance premium cannot be paid by cash for claiming the tax deductions it can only be paid through cheque, demand draft, debit/credit cards etc. However, the fee for preventive maintenance could be paid through cash.
- Senior citizens of age more than 80 years with no health insurance can claim a deduction of 30k per FY for health check-up and treatments.
- Section 80 DDB permits a deduction upto 140k (60K for persons above 60 and 80k for persons above 80) for health care expenses for specified critical illnesses like cancer, renal failure etc. An endorsement needs to be attached in the form of a medical specialist certificate while filling IT forms.
- Section 80 DD permits a deduction upto 75k for expenses like nursing, rehab, treatment and similar for a dependant with disability (limit goes upto 125k for serious disability). This can be for dependant parents, spouse, children or even siblings.
- Under Section 80 U a person with disability can claim upto 75k, in case of severe disability the limit can go upto 125k.
For claiming the tax benefits available under 80 D or any of the sections available under the IT act for that matter, one needs to keep below points in mind.
- If the individual taxpayer is salaried, one should declare the actual amount he wishes to claim for deductions under various sections, when the company HR asks for investment declaration. Investment declaration in corporate companies is generally done on a website portal.
- The monthly deduction of tax from your salary will be basis this declaration you give.
- While submitting the investment proof, again when the company HR asks to submit the same, all insurance premium payment receipts and/or preventive check up bills should be submitted in hard copy or uploaded in the web portal as soft copy.
- For people like professionals and self-employed, one should attach the premium receipt and bills while filing IT forms and return to avail the tax deduction and rebates.