How to get tax benefits on health policies

Health Insurance policies have become the need of the times, especially in the face of the rise of lifestyle diseases. These policies, which help meet any planned or unforeseen spending on hospital stays and medications, also have tax benefits. Under section 80D of the income tax (IT) act, you can take advantage of deductions for payments up to 50,000 for premiums on senior policies and 25,000 for the rest of your household for a year. However, there are some circumstances in which you may still lose your tax deduction benefits even if you have followed all the IT rules.

No cash payment: Policyholders can claim a tax deduction on Health Insurance only if they pay the premium through a method other than cash. “When purchasing a policy, you should pay the premium by check, or by wire transfer via NEFT, IMPS or UPI. You need to use a banking line, whether offline or online, to be eligible for tax benefits,” says Anup Bansal, Scripbox’s chief business officer. their economy.

No proof, no benefit: Employees of most institutions must file an investment return at the beginning of the financial year, usually in January and February. They must fill out their investments and premium details on that form. “You need to send proof of investment to your employer by mail or upload them to your employer’s HRMS portal when claiming health insurance tax benefits during the financial year. Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd.

However, if you miss filing the proofs, you can still claim a refund when you file your income tax return. However, you’ll need to keep your premium payment slips on file as proof of a policy purchased during the previous fiscal year.


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Other restrictions: Any payments made to policies made on behalf of people who are not part of your ‘family’ will not be eligible for the withholding benefit. For example, you can only claim benefits if you pay a premium for a policy purchased for yourself, your spouse, dependent children, and parents. “Any premium you pay for health insurance for your financially independent children will only be considered an expense,” said Rakesh Goyal, director of insurance brokerage Probus. fees and will not be eligible for tax benefits. siblings, grandchildren, and even son-in-law, you cannot claim a tax deduction on premiums paid on their policies.

Many years policy: It is important to understand the benefits of a multi-year health policy. You can claim a prorated tax deduction benefit for the life of your policy if you receive a separate receipt for each year from the insurance company. Otherwise, you can only claim the tax benefit for one year.

Please note that you may receive a discount on a multi-year health policy. For example, instead of buying a policy in which you need to pay 25,000 premium per year, you can buy a multi-year health policy that lasts two years. And, instead of paying 50,000 for two years for this policy, you can pay 45,000 in one go. However, the tax benefit in this case will only be for one year. In such cases and depending on your tax table, it is better to seek the advice of a financial planner who can guide you in choosing a discount with a multi-year policy or going with a medical policy. economy every year.

Insurance premium receipt: If you do not bring your receipt/certificate of premium after paying your premium, you may lose your tax benefits. For example, you won’t get a tax-deductible benefit if you paid a premium for your spouse’s health policy but didn’t carry a certificate in your name after paying the premium.

Licensed insurance companies: The Insurance Development and Regulatory Authority of India (Irdai) conducts regular campaigns to raise awareness about fraudulent websites selling health insurance policies. If you purchase a policy from an insurance company that is not approved by Irdai, you may lose tax benefits on premiums paid. Therefore, make sure that you only buy a policy from an authorized insurance company.

Timely extension: Most health insurance policies have a term of one year. If you do not pay your policy renewal premium on time, you will lose your tax deduction benefits.

OPD . health subscription packages: Buyers should not confuse OPD health plans with health plans because they cannot claim section 80D tax benefits when they receive OPD based health plans from certain companies insurance technology.

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