Health insurance benefits: Taxpayers' guide to getting income tax rebates

Health insurance offers financial protection against unexpected medical expenses and hospital bills during critical times when support is needed most. It is one of the most effective ways to manage financial challenges arising from health emergencies.

 

However, a significant portion of the population lacks health insurance, often depending on personal savings or borrowing money to cover medical costs. To promote the adoption of health insurance, the government has introduced tax benefits for those who purchase medical insurance policies. Let us understand how you can claim a tax rebate for health insurance premiums.

 

“Individuals can claim a tax rebate for health insurance premiums under Section 80D of the Income Tax Act. This deduction covers premiums paid for policies benefiting yourself, your spouse, children, or parents. The maximum deduction is Rs 25,000 per year, which increases to Rs 50,000 if the insured is a senior citizen. For those paying premiums for both themselves and senior citizen parents, the combined limit can go up to Rs 75,000 annually. However, this deduction is only available for payments made through non-cash modes like online transfers or cheques,” said Pankaj Nawani, CEO at CarePal Secure.

 

Have a look at look table to understand the maximum tax deductions on health insurance premiums:

 

 

Who is eligible for deduction under Section 80D?

 

Individuals

 

Hindu undivided family (HUFs)

 

No other entity can claim this deduction. For example, a company or a firm cannot claim a deduction under this section.

 

Key considerations for claiming tax rebates

 

Taxpayers must maintain proper documentation to claim these benefits:

 

Original health insurance premium payment receipts.

 

Policy documents.

 

Age proof for senior citizen claims.

 

Medical examination bills (if applicable).

 

Financial experts recommend points to keep in mind: 

 

Choose comprehensive health insurance plans.

 

Regularly reviewing and updating coverage.

 

Understanding the fine print of tax deduction clauses.

 

Consulting with tax professionals for personalised advice.