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In today’s times, it is a fact that medical cost are rising. Health or Mediclaim Insurance is an essential Investment in present times. In the absence of health insurance, medical costs boast the ability to wipe out your entire life savings.
It is important to understand that safeguarding yourself and your family against financial crisis during illness, hospitalization or accidents is a logical move.
But did you know that apart from Medical Coverage, Insurance policies hosts a number of tax benefits?
According to the provisions of Section 80 D of Income Tax Act, 1961, the benefit of deduction is given to taxpayers.
Important Features of Medical Insurance Policies
Before venturing into the details of Tax deductions under 80D, you need understand certain important features of Medical Insurance Policies and the benefits it offers:
These are few of the many reasons why investing in Medical Insurance policy is a smart choice. The tax benefits it hosts is another reason safeguarding against medical expenses is a logical move.
Defining What Is Section 80D- Medical Insurance Premium
Section 80D offers taxpayer to claim the premium amount paid towards mediclaim insurance as a deduction. The premium paid is eligible for deduction under 80D pertaining to the limits specified.
A taxpayer can only claim the deduction for insurance policies which are in the name of:
In the cases mentioned above taxpayer can claim the premium paid as a deduction under Section 80D of Income Tax Act, 1961.
Quantum of Deduction for Health Insurance Premium under Section 80D
The quantum deduction can be elaborated as follows:
Deduction for Preventive Health Check-Up under Section 80 D
A new deduction has been further allowed under Section 80 D of Income Tax Act, 1961.
The deduction provided is for Preventive Health Check-Up.
A deduction of up to Rs.5,000/- for payment towards preventive health check-up of either individual, spouse, dependent children, dependent or independent parents.
This deduction of Rs.5,000/- is included in the above-mentioned limit of Rs.25,000/-.It is included in the above deduction.
It is to be noted that the deduction of Rs.5,000/- is the maximum deduction allowed. The deduction is not for per person but in totality including Individual, Spouse, Dependent Children and Independent or Dependent Parents.
To help you understand how it works, check out the following example:
Tax Deduction Under Section 80D: Rs. 20,000 (A) + Rs. 5,000 (B) = Rs.25,000/-
Know The Difference Between Mediclaim and Medical Allowance
There is difference between your mediclaim expenses and medical allowance.
Medical allowance is provided by your employer whereas Mediclaim is the premium you pay towards your mediclaim policy.
Medical Allowance is a part of an agreement which is between you and your employer.
You can claim medical allowance up to Rs.15,000 as exemption from Gross salary. In order to get the allowance benefit and to claim the Medical allowance, you need to submit medical bills to your employer.
The medical reimbursement allowance is further exempted under Section 10 of Income Tax Act, 1961.
It is an applaudable move by the Government to promote Physical Health with generous tax benefits under Section 80 D. The onset and increase in diseases and the medical costs associated with it gives rise to imminent need of a good life insurance policy coupled with a pro-active preventive health check-up policy.
Author of this Article is a experienced Bloger and A Insurance adviser for Term Insurance, Investment Options, Investment Plans, Term Plans, ULIP, Mutual Funds and Tax Saving.
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