If a person has worked incredibly hard for about 20-30 years and saved enough, then it’s time for them to rest now as the desire to lead a stress free life is the ultimate goal for most. However, old age comes with its share of medical issues, which makes it imperative to Invest in health insurance. If you’ve insured yourself well in time, you shouldn’t be worrying about spending conservatively post-retirement.
It’s logical to Invest in Health Insurance cover early on in life, as an uninvited health crisis could always be a potential threat. On the other hand, if there are no such unforeseen circumstances, you would’ve saved enough for the future.
Also, if you’re medically insured, you can claim tax deductions every financial year by paying a premium to the service provider. Under Section 80D of the Income Tax Act, whatever premium you pay periodically, is deductible from your taxable income. The higher limit for this deductible amount is Rs 25,000, and for a senior citizen, this amount can go up to Rs.50,000.
Nonetheless, choosing the correct health insurance plan not just saves money, but also provides financial security in the wake of health hazards. In today’s day and age, medical coverage has become a necessity, thanks to the rising levels of pollution as well as an unhealthy lifestyle. In the last few years, the number of health insurance holders has grown exponentially, though there are many who are still unaware of its benefits.
You would be surprised to know of another side to medical coverage than just compensation for medical expenditure. If you opt for a health insurance plan, you could enjoy a maximum deduction of Rs.75,000 from your taxable income. Furthermore, you can avail this tax benefit even if you pay the premium for your spouse, children, parents or yourself.
As per Income tax laws, there are a few significant pointers to keep in mind:
1. You can avail a tax benefit up to Rs 5,000 for the expenditure on preventive health check-ups of your parents, who are above 60 years.
2. In case, you are above 60 years of age, and your parents are above 80 years, you can avail a tax benefit of Rs. 50,000
Deduction limit under Section 80 D
The tax deductions stated above have been summarized:
NOTE: Section 80D has been further divided into two sections for specific insurance requirements.
- Section 80DD: You can avail a tax benefit of up to Rs 75,000 basis the expenses incurred for nursing, training or rehabilitation of a dependent with disability. In case of an extreme situation, the benefit goes up to Rs 1.25 lakh. In either case, a supporting medical certificate has to be submitted as proof.
- Section 80 DDB- In a scenario where medical expenses have been incurred on critical ailments (cancer, chronic renal failure, Parkinson’s disease etc), a maximum deduction of up to Rs 1.4 lakh can be availed (Rs 60,000 for senior citizens and Rs 80,000 for super senior citizens). It is mandatory to attach a medical certificate while filing income tax.
Key points to consider while buying a health insurance plan
1) Analyse your needs –
Despite the fact that a health insurance is critical, it is better to analyse your needs as well as your family’s. Here’s an instance– assume either of your parents are to undergo a surgery or treatment in the coming year, it’s only wise for you to get adequate medical coverage for the surgery. It is advisable not to rely completely on your employer’s group health insurance scheme, as that might not be enough.
2) Ensure your parents are covered for life –
Choose a plan that adequately covers your parents for as long as they live. Ideally, it is preferable to purchase a medical coverage for your parents before they turn 69 years, however, there are other insurers in the market that offer plans irrespective of your parents age.
3) Ensure Transparency & State your Current Health History –
While opting for a health insurance policy, ensure you share the correct status of your parents’ health with the insurer. Any falsification of the proposal form with regard to the medical history of your parents may result in the termination of the policy.
How to claim medical insurance with ease
While the procedure to claim health insurance varies from company to company, the general steps for a cashless claim are given below:
- You must get admitted to any of the authorized hospitals in the network
- fax the completed pre-authorization form to the insurance company or Third Party Administrator (TPA)
- The insurance company cross-verifies the claims
- Finally, after proper verification of all the submitted documents, the insurance company settles the claim directly with the authorized hospital
Here are some tips to keep in mind when you choose a health insurance policy:
- Opt for a health insurance plan that prevents financial damage in case of extreme or critical illnesses.
- Before you buy a policy, always get a variety of quotes and find coverage that supports your needs
- 3) Buy policies at a young age, since the premium rises as you grow older
- 4) Spend wisely when it comes to minor ailments. If you visit a specialist, you are likely to incur a higher medical expense.
Keep re-evaluating your insurance plans on a periodic basis, so that you can make a sound judgment basis your needs. Saving tax on health insurance under section 80D of Income Tax Act, 1961 is always a great idea. As they say, a penny saved is more than a penny earned.
