How to Legally Save Tax with Health Insurance?

A health insurance or mediclaim policy is a must-add in your insurance and investment portfolio. Due to the rising costs of healthcare, continuous surge in inflation, and the ongoing COVID-19 pandemic, it is all the more crucial to get a health insurance policy. Health insurance covers you in times of medical emergencies and settles hospital bills, recovery costs, and ancillary expenses, without which you could burn a hole in your pocket. But did you know that health insurance is also one of the best tax-saving investments? Read on to find out more about its tax-saving benefits:

In what ways does health insurance help you save tax?

Any time you buy health insurance or mediclaim policy, you become eligible to receive tax benefits in the form of refunds under the provisions of the Income Tax Act, 1961. The section that deals with the tax-saving properties of health insurance are section 80D. Under this section, you can claim:

1. Premiums
The premiums you pay towards buying the health or mediclaim policy as tax deductions every year. Under this section, if you pay premiums for yourself, your spouse, your dependent children, and your parents, you become eligible to receive tax benefits up to the specified income and age limits.

Take a look at the following table to get a better understanding of the same

2. Preventive health check-ups
If you, your spouse, dependent children, and your parents get preventive health check-ups, you are eligible to get tax returns up to ₹5,000 in a year. However, the upper limit for claiming tax benefits under health insurance is ₹25,000 in a year if you are below 60 years, and ₹50,000 if you are above 60 years. This amount of ₹5,000 is included in this limit.

So, for instance, you pay ₹22,000 towards premiums in a year, and ₹5,000 towards preventive health check-ups. The total amount you can claim will be ₹22,000 + ₹3,000 from the money going towards preventive health check-ups. In every scenario, you cannot exceed the upper limits fixed under the act.

3. A contribution made to a central government health scheme
If you make any contribution towards a central government health scheme, you can claim up to ₹25,000 in a year if you are below 60 years. If you are above 60 years, you can claim up to ₹30,000.

What are the exceptions to tax-saving in health insurance?

Even though health insurance is one of the best tax-saving investments, it imposes certain exceptions on tax deductions:

1. You cannot claim tax-saving benefits for specific relations such as parents-in-law, siblings, grandchildren, aunts and uncles, and the like.

2. You can only claim tax benefits if you pay the premiums through debit/credit card, bank transaction, or online methods of payment. You can only pay in cash for preventive health check-ups.

3. You cannot claim tax benefits for being covered any group health insurance issued by your company

To sum it up:

Health insurance offers the dual advantage of health insurance protection and tax-saving. However, you should not get it with the sole intention of tax-saving. By itself, health insurance is not a very profitable tax-saving investment. But when clubbed together intending to get financial support for healthcare, it becomes a potent investment tool. Furthermore, there are several good health insurance plans. But it is always wise to do your research and compare different health plans to find the best one available.

Visit PNB MetLife to know more about Long Term Savings, Term Insurance & Term Plan.

Whether you are trying to lose weight or making a shift towards a healthy life, understanding your BMI (Body Mass Index) is one of the first necessary steps you can make. The BMI calculator can indicate your body’s fat content based on your weight and height. Once you have a clear view of this, you can go through different health insurance plans on the PNB website and secure your future financially against the growing healthcare costs.