There is no denying the importance of health insurance. As you are well aware that
a) the incidence of medical problems is rising, and
b) the cost of treating these medical problems is skyrocketing.
Given this scenario, if you are banking on your own funds to meet the cost of any medical exigencies, you are making a big... very big... mistake.
Without a health insurance cover you are exposed to huge financial risk. Even one critical illness could not only wipe out many years of your hard-earned savings, but also push you into deep indebtedness.
In light of the above, Finance Minister Shri Arun Jaitley's announcement of additional tax benefits on our healthcare is indeed a welcome step.
In his Union Budget for 2015-16, Shri Jaitley has proposed to
i. enhance the tax deductions on health insurance "premium"
ii. and more importantly, include even certain healthcare" expenses" for claiming tax deduction.
As you are aware, u/s 80D of Income Tax Act, you can claim tax deduction for the premiums that you pay for buying health insurance policies for your family including your parents.
Till now you were allowed deduction up to
... Rs.15,000 for insuring self, spouse and dependent children
+ Rs.15,000 for insuring your parents
A higher deduction of Rs.20,000 was allowed if the insured was a senior citizen i.e. of age 60 years or more.
[By the way, the above limit includes the "premiums" paid for health insurance policies and the "expenses" up to Rs.5000 towards preventive health check-up.]
Budget boost No.1
Henceforth, with effect from April 1, 2015, the allowable tax deduction would increase to
... Rs.25,000 for insuring self, spouse and dependent children
+ Rs.25,000 for insuring your parents
And for senior citizens the enhanced limit would be Rs.30,000.
Budget boost No.2
Normally, getting an insurance cover for very old people is either not possible or very expensive. As such, very elderly people often go uninsured.
To provide some relief in such instances, this budget proposes to include even the expenses incurred on the medical treatment of "uninsured 'very' senior citizens" as eligible for tax deduction u/s 80D.
This would be subject to a limit of Rs.30,000 including both insurance premiums and expenses on medical treatment.
For example:
i. For Individual and his family
- Health insurance premium : Rs.21,000
ii. For parents
- Health insurance of Mother : Rs.18,000
- Medical expenditure on father (very senior citizen) : Rs.15,000
Total Deduction eligible u/s 80D = Rs.21,000 + Rs.30,000 = Rs. 51,000.
[Note : Very senior citizen is defined as a person of age 80 years or more].
The other stipulations under Sec 80D would continue to apply i.e.
- the payment should have been made out of the income chargeable to tax
- tax benefit would NOT be available if the premiums are paid by cash
- health check-up can be paid in cash
- the policies should have been bought from approved insurance companies only.
Concluding... you would do yourself a big favour by insuring your family against medical related problems. Such policies are extremely cheap vis-a-vis the average cost of any treatment these days. As such, they will prove exceptionally effective in protecting your wealth against unforeseen, but widespread, medical risks.
a) the incidence of medical problems is rising, and
b) the cost of treating these medical problems is skyrocketing.
Given this scenario, if you are banking on your own funds to meet the cost of any medical exigencies, you are making a big... very big... mistake.
Without a health insurance cover you are exposed to huge financial risk. Even one critical illness could not only wipe out many years of your hard-earned savings, but also push you into deep indebtedness.
In light of the above, Finance Minister Shri Arun Jaitley's announcement of additional tax benefits on our healthcare is indeed a welcome step.
In his Union Budget for 2015-16, Shri Jaitley has proposed to
i. enhance the tax deductions on health insurance "premium"
ii. and more importantly, include even certain healthcare" expenses" for claiming tax deduction.
As you are aware, u/s 80D of Income Tax Act, you can claim tax deduction for the premiums that you pay for buying health insurance policies for your family including your parents.
Till now you were allowed deduction up to
... Rs.15,000 for insuring self, spouse and dependent children
+ Rs.15,000 for insuring your parents
A higher deduction of Rs.20,000 was allowed if the insured was a senior citizen i.e. of age 60 years or more.
[By the way, the above limit includes the "premiums" paid for health insurance policies and the "expenses" up to Rs.5000 towards preventive health check-up.]
Budget boost No.1
Henceforth, with effect from April 1, 2015, the allowable tax deduction would increase to
... Rs.25,000 for insuring self, spouse and dependent children
+ Rs.25,000 for insuring your parents
And for senior citizens the enhanced limit would be Rs.30,000.
Budget boost No.2
Normally, getting an insurance cover for very old people is either not possible or very expensive. As such, very elderly people often go uninsured.
To provide some relief in such instances, this budget proposes to include even the expenses incurred on the medical treatment of "uninsured 'very' senior citizens" as eligible for tax deduction u/s 80D.
This would be subject to a limit of Rs.30,000 including both insurance premiums and expenses on medical treatment.
For example:
i. For Individual and his family
- Health insurance premium : Rs.21,000
ii. For parents
- Health insurance of Mother : Rs.18,000
- Medical expenditure on father (very senior citizen) : Rs.15,000
Total Deduction eligible u/s 80D = Rs.21,000 + Rs.30,000 = Rs. 51,000.
[Note : Very senior citizen is defined as a person of age 80 years or more].
The other stipulations under Sec 80D would continue to apply i.e.
- the payment should have been made out of the income chargeable to tax
- tax benefit would NOT be available if the premiums are paid by cash
- health check-up can be paid in cash
- the policies should have been bought from approved insurance companies only.
Concluding... you would do yourself a big favour by insuring your family against medical related problems. Such policies are extremely cheap vis-a-vis the average cost of any treatment these days. As such, they will prove exceptionally effective in protecting your wealth against unforeseen, but widespread, medical risks.
