How to claim tax benefits of health insurance
Posted by: Girija Gadre, Arti Bhargava and Labdhi Mehta on Feb 13, 2017, 06.30 AM IST
The Aroras are a family of six-Aditya, his wife, their twins, his father and grandmother (aged 63 and 83 respectively). His father is financially self-sufficient but they stay as a joint family as they value each other's support. Aditya and his wife are doctors and the family realises the importance of health insurance amid rising medical costs.
However, no one in the family has health cover. His adviser tells him that with health insurance, Aditya may be able to avail some tax benefits as well. Can he take health cover for everyone in the family and get tax benefits for the same?
Aditya can claim a deduction up to Rs. 25,000 for health insurance premium paid for his immediate family (self and dependent children) for the financial year 2016-17. He can also claim a total deduction up to Rs. 5,000 for preventive health check-ups for the immediate family.
However, the total tax benefit for health insurance and health checkup is limited to Rs. 25,000.This could be split as a maximum premium of Rs. 20,000 and Rs. 5,000 for annual medical check-up expenses.
If he takes health insurance for his senior citizen father, he will be eligible to claim a maximum benefit of Rs. 55,000. The additional Rs. 30,000 being for the health insurance premium and medical checkup for his father.
His wife can avail of a deduction of Rs. 25,000 as well for her health policy and annual medical check-up. Therefore, as a couple, they could avail a deduction of Rs. 80,000 (55,000 + 25,000) under Section 80D.
Aditya will get the benefit of deduction of eligible amounts in his annual income tax return under Section 80D. However, all the payments for which deductions have been made must be borne by Aditya and the premiums must be paid through cheque/DD/digital media.
Aditya cannot claim a deduction for insuring his grandmother. At her age, she may not be eligible for health insurance. But since there is a deduction of Rs. 30,000 available for medical expenses incurred for very senior citizens, the same (if any) can be claimed by his father in his income tax return. He can show the same as being paid by him for his dependent mother.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.) This article appeared in Economic Times dated Feb 13, 2017, 06.30 AM IST