Health insurance is like an umbrella – something that you don’t need every day; but once in a while when it rains, it really saves the day for you. On all other days, you won’t miss it. But when it rains and if you don’t have it, you will feel its need.
A good health insurance policy helps to protect your financial savings and makes you better prepared for medical emergencies and expenses.
And besides the obvious medical coverage, health insurance plans also provide tax benefits to you.
Luckily, under Section 80D of the Income Tax Act, you get tax benefits for expenses towards health insurance premiums, preventive health checkup and other medical expenses.
Since most of you will not be hospitalized ever (I hope so!), you would be more interested in the tax benefits on the medical insurance premiums. And yes, indeed the premium paid towards health insurance is tax deductible under section 80D of the Income Tax Act, 1961.
Let’s move on and understand the tax benefits on health insurance in a bit more detail.
What is Section 80D that gives Tax Benefits on Health & Medical Insurance?
Even if tax benefits weren’t there, even then buying health insurance is a sensible decision.
Why would you want to pay big hospital bills when you can buy medical insurance by paying a small premium to cover that risk.
Imagine not buying health insurance and saving Rs 10,000 for 3-4 years and then getting hospitalized with a big bill of Rs 5 lakh. All small savings you made by ‘not buying’ health insurance is screwed up with a medical bill several times larger.
Unfortunately, most Indians still don’t see it like that.
They feel its an unnecessary expense and waste of money. Luckily, our governments have offered additional freebies in form of tax benefits to push people to buy health insurance.
And this benefit is offered via the Section 80D of the Income Tax Act, 1961 which relates to the tax deductions on medical insurance.
Section 80D specifically provides deduction in taxable income to the extent of the premiums paid on the purchase of health insurance or medical insurance or mediclaim products.
It even includes the premiums paid for the health insurance of your parents, children and spouse (wife/ husband).
And it doesn’t matter whether you purchase health insurance through a person or go for an online health insurance cover which are gaining popularity these days. You will get tax benefits in either case.
Also, the tax benefits under Section 80D are over and above the benefits under other sections like Section 80C.