What Does Your Health Insurance Decision Mean for Your Taxes or Family?

In today’s date, medical expenses due to various health problems and hospitalizations are on the rise each day. Therefore, in order to cover yourself and your family from any unforeseen medical costs, it is necessary for you to hold sufficient health insurance in your investment plan.

Importance of having adequate health insurance for your taxes:

Holding health insurance not only gives you and your family medical coverage but also there is an enhanced benefit of tax savings on your health plans. Premium paid on health plans helps you to get a suitable health plan. This premium paid also gives you the important benefit of tax savings through various tax deductions received on the premiums paid. Thus, this assists you to lower your annual taxable income and reduces your tax liability for the year.

You will be glad to know that tax benefit is offered on both the types of health insurance:-

1. Indemnity health insurance- like Individual plans and Family Floater plans.
2. Defined Benefit health insurance- like Critical illness plan and Daily Hospital cash plan.

Following are the tax benefits that come along with your health insurance decision:-

Tax benefits available under section 80 D on :

1. On premium paid on health insurance:
   • For self, spouse, dependent children and parents, in case, the individual is less than 60 years of age- Maximum tax deduction: Rs. 25,000.
   • For parents below 60 years of age -Maximum tax deduction: Rs.50,000
   • For senior citizen parents, in case, the tax-payer is less than60 years-Maximum tax deduction: Rs.75,000.
   • For senior citizen parents, in case, the tax-payer is more than equal to 60 years of age- Maximum tax deduction: Rs.1,00,000.
2. On health check-ups: Tax benefit available on preventive health check-up is up to Rs5,000.
3. On premium paid on riders: Tax benefit is available on the premium paid on critical illness or medical insurance riders.

Exclusion: Tax benefit is not allowed on the premium paid for health insurance in cash, only cash paid on health check-ups can get the tax benefit.

Tax Benefits on Extended section 80D:

1. Sec 80 DD- Deduction for medical expenses of a disabled and dependent family member is a maximum of Rs.1,25,000.
2. Sec 80 DDB – Following deduction is available for medical expenses on specified critical illness (like neurological problems, renal failure, cancer, Haemophilia, Thalassaemia, AIDS) treatments:-
   • If the individual is less than 60 years, maximum tax deduction: Rs.40,000.
   • If the individual is more than 60 years, maximum tax deduction: Rs.60,000.
   • If the individual is more than 80 years, maximum tax deduction: Rs.80,000.
3. Sec 80 U-
   • If the individual is suffering from physical disability, like being blind or mentally retarded, then maximum tax deduction: Rs. 1,25,000.
   • If the individual is suffering from severe disability, then maximum tax deduction: Rs. 1,25,000

Importance of having adequate health insurance for your family:

With the rising health issues and increased medical cost of treatments, the need for health insurance to save your out-of-pocket cost is also increasing. Moreover, it is not sufficient to have health coverage for only yourself. In today’s date, the rise in various types of ailments that can also affect any member of your family has created the need for comprehensive health insurance which can include your loved ones also and thus support your financial cos. The advancement in medicines would increase the life expectancy of your family members but at the same time, the probability of diseases will also increase and so will the medical expenses related to the treatment of the diseases. This is why you need a health insurance plan for your family to be able to provide them with the best treatment.

The need for health insurance cover for all your family members- your parents, spouse, and children:

The amount of pollution in the air, the stress level everyone goes through, the kind of lifestyle lead, food adulteration that is faced and the increased consumption of junk food all result in low immunity in kids as well as adults and make them fall ill. Therefore, it is not only important to have a health insurance for your parents for their age-related diseases like cholesterol, high blood pressure, diabetes, etc. but it is also important to have sufficient cover for your kids for their illness, specific ailments and occasional fractures and spouse for her maternity expenses, illness or specific ailments.

Understanding the two options of health insurance for the family:

1. Individual Health insurance- Under this plan, a single individual is covered. You can include your family members by paying a premium for each member of your family. So it is not a very cost-effective plan for your family.
2. Family Floater Health insurance- Under this plan, the entire family is covered under a single premium. The Sum assured coverage is shared by all the members of your family. So, this plan is more economical.

Benefits of having family health insurance:

1. Provides comprehensive coverage- Health insurance plans for family give coverage to the entire family (individual, spouse, dependent children, dependent parents, and even in-laws).
2. Cost-effective premiums- Premiums paid on family floater plans are very economical as the single premium payment covers the entire family.
3. Sharing of Sum assured- The sum assured under family floater can be used by each family member.
4. Maternity expenses covered- You can get the option to choose a plan which can cover the maternity expenses.
5. Coverage for new members- When there is an addition in family members, you can add the new family member in your family floater plan by paying an additional premium.
6. Tax benefit available- Tax deduction for family floater plans is a maximum of Rs.25,000. In the case of senior-citizen parents, the maximum tax deduction is Rs.50,000.

Conclusion:

Therefore, it is necessary and beneficial for you to have health insurance in your investment plan because of the tax benefits received which can increase your income by decreasing your tax liability and also secure your family from the burden of high health costs by fetching a family health plan.