Nobody was prepared for the catastrophe that COVID-19 brought about. The pandemic not only caused extreme mental strain to lakhs of people, but at the same time, put millions under great financial stress. And it’s still not completely over. During these difficult times, those who have health insurance can find some financial relief as they can easily pay for the cost of COVID-related treatment. Now the same health plan with COVID-19 cover can be used to get a tax rebate, with the last date of ITR filing approaching fast. Let’s learn more about this health insurance tax saving option.
Tax saving under Section 80D
You can save tax by making some investment or donations under various sections of the Income Tax Act. Among these is Section 80D that provides a tax rebate on buying medical insurance. The policy premium that you pay for yourself and your family members can help you reduce a chunk of your taxable income. It also includes the bills you pay for preventive health check-ups. When it comes to family members, it refers to your spouse, dependent children, and parents. The extent of tax deductions varies according to the age of the primary policyholder. For example, if you pay insurance premiums for yourself, your spouse, and your children, you are eligible to claim a maximum tax deduction of INR 25,000 annually. If you buy a policy for your parents, you save another INR 25,000 if they are below 60 and up to an additional amount of INR 50,000 if they are above 60. If you are yourself a senior citizen, who has bought a plan for his family members including parents, you can save up to a lakh. In addition to that, you can earn a deduction of INR 5,000 that can be availed for the expenses associated with health check-ups for the entire family.
Claim against the expenses incurred for COVID treatment
The COVID-19 health insurance tax benefit also falls under Section 80D and you can get deductions as explained above. During the pandemic, many insurance companies came up with health plans that covered only coronavirus-related hospitalisation expenses. The premium paid for all such policies also come under the Section 80D deduction criteria. One thing you must remember is that the premium should not be paid in cash, if you wish to get tax benefit.
Financial help for COVID that can get you tax exemption
In case you received financial help meant for medical expenses related to COVID-19 from your employer or any other person, the amount will be exempted from your tax, as per the latest notification from the tax department. Similarly, if any taxpayer lost their life due to COVID-19 and their family members received any payment from the employer of the deceased,such amount is tax exempted. Similar assistance received from any well-wisher is exempted from tax up to a total of INR 10 lakhs. These benefits are for FY 2019-20 and beyond. However, you can visit the Income Tax website to study the guidelines in detail.
It should not take any kind of ailment or accident for people to understand the value of a health policy with wide coverage. Unfortunately, most people tend to realise their mistake of not getting health insurance only after a major financial setback. And that is what happened during the pandemic. Not only did many people receive pay cuts, some were even laid off. And COVID-related medical emergencies added on to their worries. Which is why, having the right health plan is a must. You will not only get coverage in case of unexpected events, but also receive HEALTH INSURANCE tax benefit.