Sleeping on the most comfortable patient bed in the private medical suite of Tata Memorial Hospital, Shweta was recollecting the events that occurred in her life in the last two months. She was undergoing a medication in the leading hospitals in India, after being diagnosed with breast cancer.
Rahul, Shweta’s beloved husband, ensured that she got the best possible treatment and all the amenities which could help her recover swiftly.
However, Shweta was concerned with the total expenditure on medication since TMH is the most expensive hospital in India. “These medicines and tests will cost huge. How will Rahul arrange for the funds?”, she was worried.
On the other hand, Rahul was relaxed and very happy since his beautiful wife fought hard with Cancer and defeated it. Everyone was clueless why Rahul wasn’t bothered to accumulate funds in this crisis.
Shweta recovered within two months and was ready to be discharged from the hospital. Rahul completed all the formalities and received a huge bill of INR 13 lakhs on account of the operation, medicines, tests, private room, and doctor charges.
However, Rahul didn’t have to pay even a single penny.
Do you know why? Because he opted for a cashless medical insurance policy.
Rahul was paying the insurance premium every year for the last ten years, and finally today, it came to his rescue. The insurance company paid directly to the hospital, and he didn’t have to arrange any funds. Rahul also submitted the bills of post-discharge medicines and tests to the insurance company and was reimbursed for the expenses.
Guess what; it resulted in a double bonanza for Rahul – He had saved income tax also by claiming a deduction of the medical insurance premium.
Paying taxes every year is an awful task since a significant chunk of our hard-earned money goes into Government treasury. As the 31st March of a financial year approaches, we all look to invest the income somewhere to get the eligible deductions and reduce the tax outgo as much as possible.
How about investing in an option that not only helps in saving the taxes but also becomes a rescuer under challenging times? – Medical Insurance is the option.
If you are an individual or a Hindu Undivided Family, you can claim a deduction of medical insurance premium under section 80D of Income Tax Act.
What is the maximum amount of deduction under 80D?
An individual can claim upto INR 25,000 as a deduction on medical insurance of self and family (spouse and dependent children). If the taxpayer or any member in his family is more than 60 years old, maximum deduction claimable is INR 50,000.
If medical insurance is taken for parents, deduction of INR upto INR 25,000 is available if the parents are less than 60 years old, or upto INR 50,000 if parents are more than 60 years old.
A HUF can take the medical insurance for any of the members. If the insured member is less than 60 years of age, the maximum deduction is INR 25,000 else INR 50,000.
For any payment made towards preventive health check-up, the taxpayer can claim a deduction of upto INR 5,000 (which is included in the overall limit of INR 25,000/ 50,000)
How will single premium medical insurance policies be dealt with?
If the taxpayer has paid the policy premium amount in a lump sum in 1st year and the policy is valid for more than one year, he can claim an appropriate fraction of premium every year.
Suppose, Ramesh paid INR 80,000 in one year for a medical policy valid for four years. So, he can claim INR 20,000 every year upto four years under section 80D.
How can medical insurance prove to be a rescuer?
Hospitalisation and medical costs have increased drastically, due to which people end up spending their savings which takes a toll on future plans and growth.
Medical insurance helps in paying the medical costs which release the tension of sudden arrangement of funds. Not only this, but some medical insurance companies also pay for additional expenses like nursing and admission charges, physiotherapy and daily attendant allowance.
Also, where the employees are getting medical insurance benefit from the employer, it ceases to exist as soon as the employee retires or quits the job. Paying a premium for an additional medical insurance policy can indeed be fruitful in a tough situation.
Medical insurance, if opted correctly, can bring two benefits at the same time. However, with so many options available in the market, it is important to analyse every option according to the personal requirements. Also, while admitting the patient in case of medical emergency, ensure that the hospital is impaneled in the list of approved hospitals to claim cashless benefit from the Insurance Company.
Have you invested the money correctly in reducing the tax outgo?
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