Health Insurance Premium - Tax deductions you should not miss

Wealth is lost, nothing is lost

Health is lost, something is lost

Well, times have changed. Today, a bill from a hospital can leave a large hole in your pocket.

If you talk to advisers and financial planners, their primary focus is to build your protection or insurance portfolio even before they start talking about your investments. The reason is simple.

You see, it may take you years to build adequate wealth. But an insurance cover can easily help you tide any large medical emergency requirements.

The better news for you is that even the tax department guys support your purchase of an insurance cover. They do it by providing exemptions on life and health insurance premium.

Under section 80D of the Income Tax Act, 1961, mediclaim / health insurance premium that you pay is exempt from income tax. In short, you don’t have to pay tax on income used for buying health insurance.

Here is how it works.

For Self / Family: If you take health insurance for yourself, spouse and dependent children, you can claim exemption for premium paid upto Rs. 25,000 in a year.
For Parents: If you take health insurance for your parents, you can claim exemption for premium paid upto Rs. 25,000 in a year.

However, in case of 1 or 2, if the age of any member exceeds 60 years, then you can claim exemption upto Rs. 30,000.

So, all in all, if you are 35 years of age and you have parents above 60 years of age, you claim total exemption of upto Rs. 55,000 for health insurance premium under Section 80D.

Super Top up premium

If you have taken Top up or Super top up health insurance cover, the premium paid for the same can also be claimed for exemption within the limits as defined above.

Preventive Health Checkups

One of the lesser known exemptions is the amount incurred on preventive health checkups. A total amount of Rs. 5,000 can be claimed as deduction within the overall limit of Rs. 25,000 for self, spouse and dependent children or Rs. 30,000 for parents for the purpose of preventive health checkups.

So, if you take a health insurance for yourself for Rs. 9,000 a year and also go for a health checkup for Rs. 3,500 and you can claim exemption of Rs. 12,500 (Rs. 9,000 + Rs. 3,500) under Section 80D.

Please note all these exemptions on health insurance premium are applicable for Financial Year 2016-17.

Accident Insurance

Accident Insurance premium is not tax deductible. Having said that, it is an important aspect to cover cases of disabilities, temporary or permanent. Disabilities can restrict you from earning income.

So, before time runs out, get the maximum benefit of these tax deductions on health insurance.

Need help? Read more on:

Which health insurance should you buy?

Top ups and Super Top ups

Accident Insurance