Tax benefits for buying health insurance for parents
Tax Benefits There are numerous benefits of purchasing a health insurance in India. With these multiple benefits comes along the tax benefit. The tax benefit is one of the major benefits of having health insurance coverage. Though it is not only the best reason to purchase it. It comes as an added benefit for those who are looking for a shield against rising medical expenses.
Under the Income Tax Act 1961, there are various sections that specify the eligibility of an individual to access the tax benefits. What comes as a bonus to this benefit is the tax deduction available to individuals whose parents are insured too under family health insurance plans. Under the income tax act 1961, insurance for parents brings in the extra tax deduction.
Various Kinds of Tax deductions
Here Tax deduction for insured parents under section 80D. According to the Section 80D any individual having a health insurance plan for self, spouse and dependent children can avail up to Rs 25,000 but if a parent is insured then the person can avail more amount. In case the parent is below the age of 60 years, then the individual would be eligible to avail another Rs 25,000 tax benefit.
Therefore, when the individual and the parent both are under the age of 60 years, then the total tax benefit is Rs 50,000. In case the parent is above the age of 60, then the tax benefit is Rs 30,000. In this case, the total tax deduction would sum up to Rs 55,000 (25,000+30,000).
In case both the parent and the individual are above the age of 60 then the total tax benefit stands at Rs 60,000 (30,000+30,000). The Section 80D also provides with a Rs 5,000 tax deduction for preventive health check-up up to the maximum tax benefit limit which is Rs 25,000 for an individual below 60 years of age and Rs 30,000 for an individual above 60 years of age.
Insured and secured Parents
Tax deduction for insured parents under section 80DDB- Under theSection 80DDB, if you incur medical expenses on the critical illness treatment of your parents, you will be eligible to get tax deductions on the basis of the total health expense or a maximum of Rs 40,000. This is in case if your parents are below the age of 60 years.
Section 80DDB defines the eligibility of an individual in case of dependency of members of Hindu Undivided Family. Similarly, if the dependent parent is above the age of 6o years, the amount increases to Rs 60,000 and if the parent is above the age of 80 years, then the amount stands at Rs 80,000 as a tax benefit.
Therefore, it leads to a massive tax benefit for an individual having a dependent parent. An individual gets a heavy bonus tax benefit if their parents are covered under health insurance policies.
The following are some of the critical ailments covered under this section:
- Neurological disorders (ataxia,dementia,aphasia,dystonia muscular,deformations,hemiballismus, Parkinson’s disease,chorea,motor neuron disease)
- Chronic renal failure
- Malignant cancers
- Haematological disorders like thalassemia, haemophilia
- Full blown Acquired Immuno Deficiency Syndrome
The section 80DD
Tax benefit for insured parents under section 80DD- The section 80DD particularly deals with dependent members of the HUF who are disabled and require adequate medical assistance. Disabled parents would require more attention, and therefore the income tax law assures more tax deduction on the annual taxable income of an individual.
Under section 80DD, medical expenses incurred on the treatment of a dependent member suffering from 40% and more disability can get tax benefits up to Rs 75,000 and if the disability is more than 80% then the tax deduction is extended to Rs 1,25,000. But it should be noted that the tax benefit is given only if the medical certificate is submitted.
The disabilities as mentioned under section 80DD are blindness, low vision,leprosy-cured, hearing impairment, locomotor disability, mental retardedness.
By taking care of your parent’s health, you can earn both blessings and tax benefits!