How Health Insurance Tax Benefits 2016 Can Ease Your Pain

In this day and age, where health scares crop up so often, having a Health Insurance is extremely crucial. And once you factor in the rising costs of medical care, Health Insurance becomes even more important, not just for you, but for your loved ones as well.
Having a good health insurance will protect your loved ones from landing into a financial crunch during any serious medical problem in the future.

Apart from coverage, health insurances also give many tax benefits. So, not only are you protected against future medical problems, but you also get to save some money on taxes. A win-win situation

This table below is applicable for Financial Year 2016-17/Assessment year 2017-18. It lists the various scenarios possible while applying for health insurance tax benefit 2016. As you can see, the limits for senior citizens have been raised. We will discuss this in detail below.

Here, we will look at the health insurance tax benefit 2016. 

Eligibility

The premium one pays towards health insurance is eligible from tax liability. This is as per section 80D of the Income Tax Act.

Upon paying the premium on any mediclaim policy for the following people, you are entitled to tax deductions:

• You 
• Spouse
• Parents
• Dependent children

Features

The raised limits on health insurance tax benefit 2016 are a big boon for everyone, especially senior citizens.

Insurance amount paid for oneself, life partner, or dependent offsprings is eligible for tax exemption up to ₹25,000 rupees. This limit was revised in the 2015-16 budget, from ₹15,000 to ₹25,000.

If anyone mentioned above falls into the bracket of a senior citizen, and Insurance amount is paid for him, then the tax deduction he can avail is up to ₹30,000.

As for insurance installment paid for parents, it stands eligible for tax deduction exemption for up to ₹25,000. Again, if parents fall under the category of senior citizens, the limit increases to ₹30,000.

Key points

Listed below are a few key points about health insurance tax benefit 2016:

1. The payment for the premium amount cannot be made in cash. The mode of payment should be net banking, credit card, demand draft, etc., but not cash.
2. You can avail medical insurance on your children, but you can claim tax benefits only if they are under Eighteen years of age. If your kids are aged over 18 years and are employed, then tax benefits cannot be claimed. However, for unemployed male children, tax benefits can be claimed till they hit 25 years. As for the female child, she can be covered until she gets married, irrespective of her age.
3. Health insurance tax benefit 2016 can be claimed on both employers provided mediclaim plans and on policies that you have chosen yourself, independent from your employer. A tax deduction is applicable on both insurance policies and mediclaim policies.
4. You cannot claim health insurance tax benefit 2016 on any premium paid for your extended family (In-laws). Your wife can claim deductions if she pays the premiums from her taxable income.
5. In case, you pay premiums on behalf of someone from your family, for example, your sister or your brother, you cannot claim tax benefits.
6. The service charge amount on the paid premiums cannot be claimed as the tax deduction. Tax deductions are applicable on the premium account only.

Health Checkups and Section 80D

There are a lot of doubts regarding the reimbursement of health checkups on Section 80D. Preventive health checkup expenses up to ₹5,000 can be claimed as tax deductions. However, the overall limit of ₹25,000/₹30,000 depending on whether you are a senior citizen or not still applies.

So, consider the following scenario. Mr Kapoor is 65 years old and pays ₹27,000 as a premium. He just spent ₹7,000 on a health check-up.

Total expenses incurred by Mr Kapoor ₹34,000. But he can only get ₹30,000 as tax deductions. This is so because, under section 80D, the tax deduction amount for senior citizens is capped at ₹30,000 only. 

We hope that this article has given you a comprehensive idea about Health Tax Benefits. Check your sources and scope of reality before taking a plunge. Always put your needs in perspective before making any insurance related decision.