Income tax benefits of health insurance

As per the income tax laws of the financial year, you get some of the following tax benefits with a health insurance plan:

• According to Section 80D of the Income Tax Act, if your parents are over 60 years of age, you are below 60 years of age and you pay a premium for them, then you can get a deduction of up to Rs 80,000. This exemption usually also includes annual regular health checkups.
• If you are also above 60 years of age and you pay a health insurance premium for your mother or father (or both), you can get a tax exemption of up to Rs 1,00,000.
• If your parents are above 60 years of age, the Income Tax Act provides you a deduction of up to Rs 5,000 in medical expenses incurred for regular health checkups of your parents.
• If you are 60 years or more and you get regular health check-up of your parents who are 80 years or more, then according to the Income Tax Act, you can get a tax exemption of up to Rs 1,00,000.

(Read more: The difference between health insurance and life insurance)

Health insurance provides you with several key medical benefits, which not only help in safeguarding the health of you and your family, but can also help a lot financially. If you are the holder of a health insurance policy that covers you, your spouse and children and all are below 60 years of age, then you can get a deduction of up to Rs 25,000 on income tax.

If your parents (who are below 60 years of age) are covered under the health insurance policy, then you can claim a deduction of up to Rs 50,000 as tax benefits. If your parents are above 60 years of age and are included in the health insurance plan, then you can get a deduction of Rs 75,000 in income tax.

However, if your parents are above 60 years of age, there are chances that you can get tax exemption of up to Rs 1 lakh under certain circumstances.

(Read more: Cheapest health insurance)

If you are thinking of buying a health insurance plan or you are already an insurance holder but you are not aware of the tax exemption under it, then keep the following things in mind:

• Read the policy document carefully and understand all the information related to tax exemption in it.
• Avoid paying health insurance premiums in cash as much as possible. However, the expenditure for health check-ups can be done in cash.
• Under section 80D, you cannot get an exemption above Rs. 1,00,000 in any case (this is also applicable if you and your parents come under the category of senior citizens).
• Under HUF (Hindu Undivided Family) health insurance, the insurance of any member of the family can be claimed for tax exemption.
• You can pay the premium by any mode other than cash (like online) to avail of the deduction. 
• The benefits under section 80D are in addition to section 80C, with a deduction of up to Rs 1.5 lakh.
• The additional amount received as a deduction from the health insurance of senior citizens can also be used for medical expenses.
• If the premium of health insurance is paid in one go, it provides benefits in the form of insurance cover for many years.

(Read more: What is mediclaim insurance)

Income tax is a fee paid by one or a group of individuals, depending on their level of income and profit. Income tax is usually filed according to the period of the financial year, which can be real, fictitious or both. For the financial year 2021-22, the Government of India has fixed the rates of income tax. Income tax in India is based on a slab system according to which taxpayers have to pay. With the help of the tax slab system, every person has to pay tax on the basis of their income.

According to the Union Budget, income tax is applied to the taxpayers as follows. 

1. New tax regime

According to the Income Tax Act, every Indian whose age is less than 60 years and their annual income is more than 2.5 lakhs is liable to pay income tax. If you are older and your annual income is more than 2.5 lakhs, you may have a separate plan for paying taxes.

Income tax depends on the individual's ability to pay, which means that the tax is increased or decreased every year according to the income of the individual. As the income of a person increases, so does their income tax.

(Read more: Senior citizen health insurance plan)