Health Insurance: Dos & Donts For Availing Tax Benefits

When individuals take out health insurance for their financial protection and to receive tax benefits, they must meet the conditions set out in Section 80D of the Income Tax Code. Insurance premiums for self, wife and children up to 25,000 rupees if each of them is under 60 years old including medical check-up are deductible. Those over 60 can claim a tax deduction of up to Rs 50,000.

In addition, health insurance premiums paid to parents are tax deductible. The tax deduction can be used for both types of policies – defined benefit insurance, where a fixed amount is paid as an insurance plan, and indemnity, where a claim is paid based on medical expenses depending on the total amount insured.

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Conditions for tax incentives

However, the health insurance tax deduction is subject to certain conditions. Failure to comply will result in the Insured not being able to claim any tax exemption and the exemption may be revoked.

First, the health insurance premium must be paid by some means: check, money order through OIL or UPI, except cash. However, PHC cash payments are acceptable for tax credits.

If the payment is made by another person on behalf of the tax deductible person, the tax deductible person cannot claim any tax advantages. The deposit must be deducted from the taxable income of the person claiming the tax credit. Even when it is issued, the tax benefit cannot be shared.

Those who purchase a multi-year policy may qualify for a prorated tax deduction over the life of the policy. A person must obtain a certificate from the insurance company stating the amount that can be claimed.

However, you cannot claim the health insurance contributions of siblings for tax purposes, even if they are financially dependent on them.

You cannot claim a tax credit for OPD health plans because they are not Section 80D health plans. Ambulatory and non-monetary passenger insurance, such as B. the critical illness insurance, but grant tax benefits up to a general limit according to the age group of the insured person.

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Dealing with an Addict

A resident who incurs medical expenses for a disabled dependent (spouse, child, parent, sibling) may claim a Section 80DD deduction. If the taxpayer incurs expenses, a standard deduction of Rs 75,000 will be granted. If the dependent has a disability of 80% or more then Rs 1,25,000 will be deducted.

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