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How to Save Tax with Health Insurance?

By Prabhat Singh - Feb 18,2022
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No Room Rent Capping | No Medical Check-up up to 55yrs | Tax Benefit up to 75k | Buy Health Insurance starting @ ₹244 pm

Life is uncertain & the only thing certain about it is its Uncertainty!

Amidst all the chaos of attaining success and fulfilling our desires, we’ve missed the importance of having good health. However, having only sound health does not account fully for your healthy life nothing can because as the elders always suggests “expect the unexpected”.

To avoid the damage control later, be prepared for the damage a-forehand and one of the best ways to keep the financial troubles away from your pockets is to buy health insurance, not only for yourself but for all your dependents (spouse & children) and your parents.

Having health insurance not only protects you from huge hospital bills but also contributes to strengthening your finances by providing tax exemptions.

Following are the ways to get the Tax benefit:

  • Save Tax according to IT Act of 1961: As per the Section 80D of IT Act 1961 you can avail the tax exemption by paying the premium for health insurance you bought for yourself, dependents (Spouse & Children) and parents.

The detailed constraints of tax exemption are stated below:

 

Possible Scenarios

(Age in Years)

Exemption Allowed for Self or Dependents

A (in INR)

Exemption Allowed for Parents

B (in INR)

Exemptions Allowed in INR

(A+B)

Paid Premium for self (<60 years)

25,000

25,000

Paid Premium for self (<60 years) & Parents (<60 years)

25,000

50,000 50,000

Paid Premium for self (<60 Years) & Parents (>60 Years)

25,000 50,000 75,000

Paid Premium for self (>60 years) & Parents (>60 years)

50,000 50,000

1,00,000

 

  • Let the Health Checkup lessen your Tax burden: A lot of health insurance nowadays provide you with the option of Preventive health checkups, and as per section 80D for IT Act 1961, you can additionally claim exemptions up to INR 5,000.

One key point to be kept in mind is that the max cap off your allowed is as per the table given above.

  • Don’t prove your bragging rights by paying in Cash: As much as we all want to spend money in cash like the modern-day boxing legend, we can’t. Not if we are seeking IT exemption, so it is advisable to pay your Health Insurances’ Premium through traceable sources like (Credit or debit cards, Cheques, UPI, Net Banking etc.)
  • Cure your Tax Burden along with your critical illness: As per Section 80DDB, you can avail of tax exemptions for some of the critical diseases from INR 40,000 to 80,000 depending upon the age of the sick. If you are <60 years you can claim max up to INR 40,000, subsequently Senior Citizens <80 years can claim up to INR 60,000 and Very Senior Citizens >80 years can claim up to INR 80,000.
  • Save through Section 80DD as well: If you have a disabled dependent and a huge bill of taking care of them, you can claim tax exemptions up to INR 75,000. However, in order to claim these cap offs the disability should be more than 40%, and you shouldn’t have claimed the deductions under 80U.
  • Reduce your Tax Liabilities through 80U: If you are disabled with at least 40% of disability, you can claim deductions up to INR 75,000 and up to INR 1,25,000 for severe disability (> 80% of disability).

Medical bills are fatal for your finances & can have a huge toll on your financial planning, so start investing for it with the best health insurances and apart from insuring yourself & your dependents’ health, ensure your financial well-being as well. In the end will leave you with a quote from Amelia Earhart “The most difficult thing is the decision to act, the rest is merely tenacity”. So, make the decision and rest all will fall in place.

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