Most of the renowned financial planner suggests that the first step towards effective and sound financial plan is ensures adequate health insurance facilitates for the self and family. The premium paid for health insurance provides us tax benefits by reducing the taxable income and thereby the tax liability.

In past few years, the cost of medical treatment has sharply increased to a great extent. The medical expenditure is almost out of reach for the lower and middle class families in India. So, the Government have formulated the Scheme to provide some relief to the individuals.

Tax Benefits of Health Insurance Schemes

The policyholder pays premium, which further provides the following two benefits are as follows:-

a) Insurance coverage.

b) Tax Benefits.

 

 

Tax Benefits

The policyholder is facilitated with number of tax benefits, some of which are listed below.

1. Section 80U

This section provides deduction in respect of Medical Insurance Premium. A mediclaim policy is essential as because if any family member is sick or meets with an accident, then the medical bills wipe out the savings done till date.

An Individual or a HUF (Hindu Undivided Family) can claim deductions under the aforesaid section in the following manner-

• Where, an individual or HUF makes non-cash payments for medical/health insurance premium.
• Amount of contribution made by the taxpayer to the central government health scheme.
• Payment made against Preventive Health check-up.
• Expenses incurred for the un-keep of health of a senior citizen.

 

Deduction as per Section 80D

The following heads showcase the total amount of deduction made in respect to the individual or HUF:-

For Individual

Mediclaim premium paid for self, spouse or dependent children. Maximum amount of deduction is Rs.25, 000. In case any individuals specified to be senior citizen (i.e. 65 years or more). The deduction amount is enhanced to Rs.30, 000 for such senior citizens (It is to noted that Preventive Health Check up is Rs.5, 000).

For HUF

An amount of Mediclaim premium paid by any member of HUF. Maximum amount of deduction is Rs.25, 000. In case any member of the HUF which is covered by the Mediclaim policy is a senior citizen (i.e. 65 years or more). The deduction amount is enhanced to Rs.30, 000.

2. Section 80DD

This section assists to maintain the expenses incurred for medical treatment of the dependant family members of the individual is disabled.

Deduction as per Section 80DD

The following table showcase the total amount of deduction made in respect to the individual or HUF:-

SL. No	Category	Amount of Deduction
1.	Any Disabled Individual (A person with 40% or more of one or more disability)	Rs.75,000
2.	Any Severely Disabled Individual (A person with 80% or more of one or more disability)	Rs. 1,25,000

It is further to be note that in case the dependant dies before the death of the individual. The amount will be paid to the individual. Such amount will be taxable in the hands of the individual in the year in which it receives and would be taxable according to the Income Tax Slabs of that particular year.

3. Section 80U

This section assists to maintain the expenses incurred for medical treatment of  the person’s disability.

Deduction as per Section 80U

The following table showcase the total amount of deduction made-

SL. No	Category	Amount of Deduction
1.	Any Disabled Individual (A person with 40% or more of one or more disability)	Rs.75,000
2.	Any Severely Disabled Individual (A person with 80% or more of one or more disability)	Rs. 1,25,000

 

No Medical bills or insurance premium receipts are required to be submitted at the time of filing of Income Tax Return for claiming deduction under Section 80U.

4. Section 80DDB

This Section assists in deduction of expenditure in medical treatment of specified aliments (such as such as AIDS, cancer).

Deduction as per Section 80DDB

 The following things showcase the total amount of deduction:-

1. Deduction via medical expenditure on relative or self to the extent of Rs.40,000 or the amount incurred by the assess (whichever is less);
2. A Very Senior citizen can claim up to Rs.80, 000 as deduction.
3. A Senior citizen can claim up to Rs. 60,000 or the amount paid (whichever is less).

By ensuring adequate health insurance scheme the individual reduce the tax liability and also ensures a save and adequate health insurance for the family.

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