International Health Insurance

Life is uncertain & it can surprise or hit us with jolts at any moment. For those unexpected jolts, one needs to be planned & shielded. Health Insurance is one such shield that protects us against higher medical costs at the time of illness.

However, besides providing the insured with the affordable healthcare facilities for themselves & their loved ones, health insurance also helps them save taxes under section 80D of Income Tax Act, 1961.

The skyrocketing inflation rate is compelling people to adjust with everything, but compromising on health should be avoided at any cost; here health insurance comes into the picture. It offers people to avail quality health services without paying a penny to the hospital.

How Health Insurance Works

Health Insurance works on a simple principle. The insured buys a health insurance best suited to his needs & pays a Premium on a yearly or monthly basis, depending on the plan. In return, the insurer provides medical cover to the insured & his family in case of medical emergencies.

Some insurance policies provide cashless hospitalisation & everything that it covers under the plan, some policies reimburse later and most do both

Benefits of Health Insurance

Though, many people wrongly presume that health insurances not worthy enough to invest in, it comes with a whole set of benefits:

An efficient health insurance provides a comprehensive medical cover to the insured & their family. It covers the medical costs, provides additional benefits like free ambulance, preventive health check-ups etc.

It offers cashless hospitalization; thereby reducing the burden of arranging money at the time of medical emergencies

Health insurance helps to save taxes up to Rs. 55,000

Ways to save income tax with health insurance

Health insurance is probably an as efficient tax saving tool as life insurance policies are. This feature makes it a very profitable investment as the insurer is not only medically covered but also eligible to avail tax exemption under section 80D of Income Tax Act, 1961.

As per section 80D of Income Tax Act, 1961, following are the ways enabling an insured to avail tax exemption against health insurance policy/policies. Let’s try to understand them in a comprehensive manner:

Tax Exemption on the ‘Premium’ Paid

When a person buys a health insurance policy, he pays a fixed annual premium to the insurer. In return, the insurer bears the medical costs of the person & his family including spouse, parents & dependent children. On the basis of this premium paid, the insured can claim a tax exemption of up to Rs. 25,000 annually & up to 30,000 annually if the person or his spouse is 60 years or above.

Tax benefits by buying Health Insurance Policies for Parents

With one getting older, chances of illness rises & then the figures on medical bills are enough to make a hole in the pockets of those who bear the expenses. A higher number of people are buying health insurance policies that can safeguard their parents when they fall ill & also provide them with an exemption on tax under section 80D of Income Tax Act, 1961.

Under this act, one can claim tax exemption of up to Rs. 25,000 on premium paid for health insurance of their parents in case the parents are below 60 years old and up to Rs. 30,000 in case one or both of the parents are 60 years of age or above, irrespective of the fact whether they are dependent on their children or not.

Moreover, if the parents of the proposer are senior citizens & he/she is also 60-year-old or above, the total tax exemption one can claim is up to Rs. 60,000 which is inclusive of Rs. 5,000 preventive health check-up tax exemption for the proposer’s family and the parents.

Tax exemption against critical illness

One can also reduce their taxable amount if they are bearing medical expenses incurred due to some specific critical diseases including cancer, cardiac diseases, chronic renal failure etc. In that case, insured is allowed to avail tax exemption between Rs. 40,000 to Rs. 80.000.

However, it is mandatory for the insured to attach a medical certificate provided by the doctor in support of his claim while filing the annual income tax.

Tax saving under section 80DD of Income Tax Act, 1961

Under the section 80DD of Income Tax Act, 1961, if a health insurance policy holder bears the treatment expenses of a dependent-disabled-family member, he/she is eligible for a tax deduction up to Rs. 75,000.

Moreover, in case of severe disability which demands rehabilitation, training sessions, 24 hours nursing etc. the policy holder can claim tax deduction up to Rs. 1.25 lacs. The only clause is the disabled person has to be spouse/parents/children/siblings of the insured.

Tax exemption under Section 17

Nowadays, companies/organisations provide medical insurance to their staffs under medical allowance paid by the salary of the staffs themselves. In that case, one can claim for a tax deduction up to 15,000 annually.

However, there is one important point that often remains ignored but should always be kept in mind. In order to avail tax benefits, the insured have to pay the premium through any of the banking modes including cheque, demand draft, debit cards or net banking. Failure to that would make a person ineligible to avail the benefits.

However, income tax can be saved in case of preventive health-checks where the payment has been made in cash. Taking a health insurance policy is a smart decision. But one can make it even smarter by opting for a comprehensive health insurance policy covering maximum health aspects. Before buying a health insurance policy, compare it with the other policies available in the market.

For instance, say the health insurance policies of Apollo Munich offers comprehensive coverage in terms of ones’ needs. With health insurance but one can reap tax benefits while gifting ‘a promise of protection’ against all medical problems to themselves & their loved ones!