What are the Income Tax Benefits on Health Insurance for Parents?

What are the Income Tax Benefits on Health Insurance for Parents?

What are the Income Tax Benefits on Health Insurance for Parents?

When it comes to securing health insurance for your parents, one key advantage is the potential tax benefits you can reap under Section 80D of the Income Tax Act. By purchasing comprehensive health insurance policies in your parents' names, you ensure they receive extensive medical coverage and unlock valuable tax deductions for yourself.

This guide will explain to you the different tax benefits of health insurance for your parents and other crucial details


What are the 3 Important Income Tax Benefits on Health Insurance for Parents?

The following are the crucial income tax benefits on health insurance for parents:

  1. Tax Deductions on Health Insurance Premiums: Under Section 80D of the Income Tax Act, senior citizens can claim a tax benefit for health insurance premiums paid up to ?50,000. This benefit also extends to super senior citizens who are not covered by medical insurance.
  2. Additional Deductions for Super Senior Citizens: There is an allowance for both medical insurance premiums and actual treatment expenses for super senior citizens. This makes it easier to manage medical costs while enjoying tax relief.
  3. Medical Treatment for Specified Diseases: Section 80DDB provides a deduction of up to ?1 lakh for senior and super senior citizens on medical expenses for specified diseases or critical illnesses. This benefit can significantly reduce their tax liability.

How Much Tax Benefit Can Parents Get on a Health Insurance Plan?

The tax deductions available under Section 80D of the Income Tax Act can vary based on the age of the insured and their relationship to the policyholder. Here is a table outlining the health insurance tax benefits available under Section 80D for health insurance plans:

Scenario

Deduction under 80D

Self and family (all members below 60 years)

?25,000

For self and family parents (all members below 60 years)

?25,000 + ?25,000) = ?50,000

For self and family (all members below 60 years) senior citizen parents

?25,000 + ?50,000 = ?75,000

For self and family (with the eldest member above 60 years) senior citizen parents

?50,000 + ?50,000) = ?1,00,000

What are the Different Types of Health Insurance Policies for Parents?

When selecting health insurance for your parents, it is essential to consider the various types of coverage available to ensure their medical needs are met effectively. Here are the three main types of health insurance plans that can cover treatment costs for your parents:

  1. Individual Health Insurance Policy
    This type of policy offers specific protection to each person named in the policy. If you select this plan for your parents, they will have an individual policy. This plan provides an assured amount for every person, which is beneficial since it makes each parent’s coverage independent of the claims made by the other. It can be particularly helpful if one or both of your parents have different health requirements or if you would like to give them more specialised care.
  2. Family Floater Health Insurance Policy
    In contrast to the individual policies, the family floater plan ensures that all the members who are in the policy are covered for a specific amount. This means the total coverage amount is divided among all family members, including your parents. Although this can be cheaper, it may not be the most suitable for your parents most of the time. If there are several claims during the year, the available sum assured may reach its limit, and subsequent claims may be underpaid. This kind of policy is well suited for families with minor medical problems or when more than one member must be covered under the same policy.
  3. Senior Citizen Health Insurance Policy
    As the name suggests, senior citizen health insurance policies are tailored to meet the medical requirements of those people who are above 60 years old. These policies offer extensive benefits for nearly all health complications prevalent within the senior years, such as chronic diseases and other ageing-related complications. Some senior citizen plans may also include extra features like home hospitalisation and AYUSH treatments. These features make them particularly appropriate for your parents, providing added coverage and security.

How to Select the Best Health Insurance Policy for Your Parents?

To choose the best health insurance for your parents, consider the following:

  • Coverage: When selecting a health insurance plan for your parents, ensure that the policy includes expenses related to hospitalisation due to accident or illness and pre and post-hospitalization expenses. It should also cover annual health check-ups, major surgeries, and high-cost procedures without having to exclude the room rent. Furthermore, ensure that the coverage given involves psychiatric interventions.
  • Critical Illness Benefits: These policies protect against serious diseases such as heart disease, cancer, or organ failure. They often have very extensive coverage but always look for a clause that states that no claim can be made unless you are willing to wait for a certain period.
  • Claim Settlement Ratio: Always check the insurer's claim settlement ratio, which indicates how effectively they handle claims. This information is available on insurance provider websites.
  • Hospital Network: Try to look for insurance plans with an extensive network of hospitals. A larger network increases the likelihood of receiving treatment at nearby facilities.
  • Waiting Periods: Opt for plans with the shortest waiting periods, which is the time you must wait before coverage begins.
  • Premiums: Choose a health insurance policy that fits your budget. Keep in mind that higher coverage often means higher premiums.

Securing health insurance for your parents not only provides them with crucial medical coverage but also offers valuable tax benefits under Section 80D of the Income Tax Act. By understanding the various types of health insurance plans and carefully selecting one that meets their needs, you ensure comprehensive protection for their health and financial peace of mind.