Here’s how you can save up to Rs 1 lakh in income tax by buying a health insurance plan

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Before you even start saving for your goals, purchasing a health insurance plan is suggested by financial planners.

The last date for tax saving for the financial year 2021-22 is March 31, 2022. In order to save tax, if you have already exhausted the limit of Rs 1.5 lakh available under section 80C, you may consider tax savings under Section 80D. Under Section 80D, the premium paid into a health insurance plan, up to a certain age-based limit, will give you the tax benefit, which exceeds the Section 80C limit. You can save up to Rs 1 lakh in income tax by buying a health insurance plan if you and your parents are over 60 i.e. elderly. There are also exclusive health insurance plans for the elderly.

The tax advantage which you may receive on the premium paid for any type of health insurance policy falls under Section 80D of the Income Tax Act 1961. The maximum tax benefit is capped at Rs 25,000 or Rs 50,000, however, the actual tax benefit will depend on your age. So, if you are over a certain age, the total deduction you can avail is Rs 1 lakh.

“The health insurance premium can be claimed as a tax deduction up to Rs 25,000 for persons under 60 and up to Rs 50,000 for persons aged 60 and over. This means that if you are under 60 years old and want to buy health insurance for yourself and your parents (at least 60 years old), the total tax benefit can be used up to Rs 75,000. If you and your parents are aged 60 and over, the maximum deduction that can be used is Rs 1,00,000,” says Pankaj Arora, MD and CEO, Raheja QBE General Insurance Company. The premium paid will bring your total gross income by an equal amount, thus reducing your tax liability.

Before you even start saving for your goals, purchasing a health insurance plan is suggested by most financial planners. Any serious illness or even any casualty requiring hospitalization for a few days can lead to a hospital bill of several thousand dollars. A health insurance plan costs a fraction of the cost for an insured sum (coverage) that the insurer agrees to pay to the hospital. After purchasing health coverage for adequate coverage, it may not be necessary to dip into existing savings or borrow from friends or relatives.

“The Covid-19 outbreak has highlighted the stressful financial burden of treatment, hospitalizations and medical costs that adequate insurance cover provides in these uncertain times. Not just Covid-19, health cover guarantees you not having to compromise your savings to meet rising medical costs due to illness, so a health insurance plan with adequate coverage is essential for the whole family,” says Arora.

Section 80D tax benefit is available on all health coverage plans such as individual or Mediclaim plans, Family Floater plan, critical illness plans, life insurance plan health riders and even others variants of health insurance.

The tax benefit is only an ancillary benefit that accompanies health coverage. It is always best to purchase adequate coverage for yourself and all family members to cover hospital bills at the time of hospitalization.

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