What are the tax benefits of a health insurance policy ?

Rohit Ghai is a middle-level manager at one of the Fortune 500 firms in Gurugram. He wishes to buy additional coverage for his health in form of a comprehensive health insurance policy. For this purpose, he starts looking for some good health insurance plans that meet his need and promise good coverage from most health conditions that might arise. But the fact is that these plans also have a high premium attached to them and Rohit is just not sure that it is worth it to spend all that money on insurance. Unable to decide by himself he mentions this to his colleague Sharad, who also happens to be a chartered accountant. Sharad explains to him that the premium that he is paying can all be claimed as health insurance tax benefits while filing his tax return ultimately providing dual financial benefit to Rohit. Are you also wondering like Rohit, how can you get tax benefits from your health insurance policy? Read on to find out.

What is a health insurance policy?

Very simply, a health insurance policy is an insurance policy that can take care of the medical expenses of a policyholder or their family members in case of a family floater policy. Also used interchangeably with the term medical insurance, a health insurance policy comes with a certain amount of coverage amount and any hospitalization, pre and post-hospitalization, OPD consultations, day care, diagnostics are covered under it. Even non-medical expenses such as room rent can be covered through the health insurance policy. While the health insurance policy can help you get cashless treatment at some hospitals which are known as network hospitals, you can also get yourself treated at any hospital and file a claim with your insurer where the claim amount will be reimbursed to you.

What are the benefits of a health insurance policy?

Treatment of most diseases has gotten increasingly expensive over the past few years which can easily push anyone towards bankruptcy. The hefty medical bills can eat up your savings very quickly unless you have them protected through a suitable insurance plan. A health insurance plan can benefit you in various ways such as the ones listed below:

  • Manage and minimize lifestyle diseases: These days a fair amount of the population suffers from the diseases that take root in a person due to his or her lifestyle choices. High blood pressure, diabetes, high cholesterol, obesity, fatty liver, and many such conditions can be avoided by making healthier lifestyle choices. Many of these diseases need regular doctor consultations and tests which can be covered under a health insurance policy.
  • Treatment affordability: As the years pass by inflation may affect the treatment costs. With the right health insurance policy, you can make sure to always have enough coverage to economically manage the treatment costs.
  • Protect your savings: One of the major blows to your savings can come in form of a critical illness. It can leave your finances seriously low and even compromise your family’s future. A health insurance plan takes care of the medical costs leaving your savings untouched from the hefty treatment costs.

Apart from these health insurance plans can also provide tax benefits to the policyholder.

How can you get a tax benefit from your health insurance plan?

The health insurance premium paid by you can be claimed as a tax deduction while filing your income tax under Section 80D of the Income Tax Act. Even deduction can be claimed on insurance premium paid for your spouse, parents, and dependent children. Whether you are paying for a regular insurance plan or a top-up plan, you can claim deductions from your income tax. You can claim from INR 25,000 to INR 50,000 as deductions. The deductions are only applicable to premium payments made through non-cash methods.

For getting more details on the various health insurance plan and the benefits they carry, you can visit the IIFL website. You can compare various plans and choose one that fits your needs the best.

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