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How to Claim Tax Benefits on Premiums for Multi-year Health Plans

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How to Claim Tax Benefits on Premiums for Multi-year Health Plans

Instead of looking at health insurance as an investment instrument with returns, one should get it to protect their resources in the case of unforeseen circumstances. Health insurance is now strictly required and not simply a luxury due to the escalating cost of healthcare. You can preserve your intended budget in an accident by insuring yourself with health insurance. Due to a lack of knowledge, many are reluctant to get health insurance since it requires a premium payment and offers no benefits. A health insurance plan, however, protects you when you’re most vulnerable, making it essential to get one for everyone.

Health Insurance Tax Benefits:

• Individuals and Hindu Undivided Families (HUF) are eligible for a tax deduction on the premium they pay for health insurance under Section 80D of the Income Tax Act of 1961.
• You can get a health insurance plan and deduct the premiums you pay from your taxes if your yearly income is taxable.
• You can profit from the tax advantages whether you choose an individual or family floater plan.
• It helps you save your hard earned money in addition to safeguarding you against escalating medical expenses.

Eligibility for Tax Deductions for Medical Insurance:

• According to Section 80D of the IT Act of 1961, you must provide the following information to qualify for a tax deduction for a health insurance plan.
* Persons who have purchased health insurance for their spouse, dependent children, or parents.
* Undivided Hindu Family Member (HUF)

CasesTax Deductions
Family and Oneself (All below 60 years)Rs. 25,000
Family and Self + Parents (All below 60 years)Rs. 25,000 + Rs. 25,000 = Rs. 50,000
Family and Self (Below 60 years) + Senior Citizen ParentsRs. 25, 000 + Rs. 50,000 = Rs. 75,000
Family and Self (Eldest is above 60 years) + Senior Citizen ParentsRs. 50, 000 + Rs. 50,000 = Rs. 1,00,000

• For example, Mukesh is 45 years old, and his mother is 75.

* Mukesh has purchased a medical insurance policy and is paying premiums of Rs. 30,000 and Rs. 35,000, respectively, for himself and his mother.
* Mukesh can claim tax advantages of up to Rs. 50,000 for her coverage and up to Rs. 25,000 for his policy as his mother is a senior citizen.
* Considering the limitation on tax deductions, Mukesh is only permitted to deduct up to 60,000 rupees (Rs. 25,000 + Rs. 35,000) in taxes.

Payment Method for Health Insurance Premium:

• The following are the options for paying the premium medical insurance plan.
• Please be aware that cash payments are not subject to tax advantages.

* Online – Net Banking (Debit/Credit).
* Cash.
* Demand Draft.
* Cheque.

Health Insurance Tax Benefit for Elder Citizens:

• Below is the health insurance tax advantage under Section 80D for elderly persons (above 60 and below 80 years of age) on health insurance premiums.

* Declare a tax exemption of up to Rs. 50,000 every fiscal year.
* During each fiscal year, you may claim a tax exemption of up to Rs. 5,000 on preventative health check-ups.

Advantages of a Multi-year Health Insurance Plan:

• Now that you know the significance of health insurance tax deductions, consider purchasing a multi-year health plan.
• One advantage during price increases is that the cost of multi-year health insurance coverage remains constant during the
• plan.
• A multi-year health plan requires the whole premium to be paid in advance.
• Hence
• , it’s advisable to think carefully before getting long-term health insurance.
• Don’t worry about the policy being valid for only the first year of your health insurance policy when it comes to the tax exemption on your long-term health insurance plan.
• You can claim it annually.
• A person bought Rs 30,000 for a three-year insurance plan; for instance, he might claim Rs. 10,000 in tax exemption.

Health insurance also safeguards your money and provides security when you need it most. It would not be a prudent decision to disregard this tax deduction. Make sure to ask your health insurance provider about the amount of tax deduction you may receive from the insurer before you buy a health insurance plan. Make sure to include a tax exemption claim when completing your income tax return to ensure you receive the benefit.