After life insurance, health insurance is perhaps the most imperative plan one should have in his/her portfolio. It works in a simple manner, the insured pays regular premiums to the insurer in return of which the insurer promises to cover him financially in case of a medical contingency. But there’s more to health insurance than just reimbursing the individual for the expenses he/she incurs on his/her medical treatment. Just like life insurance, a health plan acts as a very efficient tax saving tool. It provides the insured substantial tax exemption under section 80D.
Despite the medical benefits of health insurance, a policy reduces your annual income tax liability subject to the premium paid for the same. In fact, the premium paid for not only you and your family but also your parents makes you eligible for income tax exemption under section 80D of Income Tax Act, 1961.
As per Section 80D of the income tax act, the premium paid towards a health insurance plan is deductible from the taxable income. The upper limit for this deductible amount is Rs 15,000 and is extendable to Rs 20,000 for senior citizens. Thus, it enables an individual to enjoy a maximum deduction of Rs 35,000 from the taxable income. In rare cases, the age of both the proposer and his parents is above 65 years. The deductible amount in such cases extends up to Rs 40,000 (Rs 20,000 + Rs 20,000)