Older adults are prone to illnesses and infections and may require frequent medical care. Considering healthcare expenses are increasing by the day.
Senior Health insurance
Older adults are prone to illnesses and infections and may require frequent medical care. Considering healthcare expenses are increasing by the day, even a minor medical procedure can take away a part of your savings. H;owever, if you are a taxpayer in India, you can claim a rebate of up to ₹50,000 on your medical bills and health insurance premiums under Section 80D of the Income Tax Act, 1961. This rebate can ease your tax liabilities and help you save a significant amount every year. Read on to understand how to save taxes with medical bills and Mediclaim policy premiums under Section 80D.
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Tax Deductions Under Section 80D for Senior Citizens
If you are a senior citizen and a taxpayer in India, you can claim the following deductions on your medical expenses and health insurance premiums. Here’s how —
1. Medical bills: If you are not covered under health insurance, you can claim a tax rebate of up to ₹50,000 on your medical expenses incurred during the financial year. These expenses may include your medical consultation bills, the cost of medicines, etc. However, you must pay the medical bills through your bank to claim tax deductions.
2. Health insurance premiums: If you are above 60 and are covered under a health insurance policy, you can claim deductions of up to ₹50,000 every year on the premiums paid towards your health plan. However, premiums paid in cash are not eligible for deductions.
3. Preventive health check-ups: You can also claim yearly deductions on your preventive health check-up bills paid in cash or through the bank. The maximum rebate allowed under this is ₹5000. However, if your medical bills or health insurance premiums are more than ₹50,000 during the same financial year, you cannot claim a refund on your preventive health check-up bills.
Let’s understand this with an example:
Suppose your health insurance premium is ₹55,000. If you opt for preventive health check-ups during the same financial year, you cannot claim tax deductions on them.
However, if your health insurance premium is ₹40,000 and your preventive health check-up bills amount to ₹4,000, you can claim deductions on both.
Points to Keep in Mind
The maximum deductions for senior citizens under Section 80D is ₹50,000. This includes medical bills, health insurance premiums, and preventive health check-up bills.
You can claim tax deductions on your medical bills only if you are not covered under health insurance. If you have a Mediclaim policy, you must file a claim with your insurance provider.
Children paying health insurance premiums for parents can claim deductions while filing their income tax returns. For example, if you pay health insurance premiums for your parents, who are senior citizens, you can claim tax deductions of up to ₹50,000 every year. If your parents are not covered under health insurance, you can claim a rebate of ₹50,000 on the incurred medical expenses during a financial year.
If both, child and parent, pay policy premiums, both can claim a deduction depending on the amount paid by each. For example, suppose the premium of your senior citizen health insurance policy is ₹40000. You pay ₹10,000 from your pocket, and your son pays the remaining ₹30,000. In this case, you can claim a refund of ₹10,000 while filing your tax returns, and your son can claim a rebate of ₹30,000.
Health insurance premiums paid in cash are not eligible for deductions. Therefore, make sure you pay through your bank via debit card, credit card, net banking, or demand draft.
Although you can claim a rebate of up to ₹50,000 on your medical bills every year, the same may not be enough to ease your financial woes during expensive medical procedures. Keeping this in mind, it is wise to stay covered under a comprehensive health insurance policy. A health policy will cover your medical bills up to the sum insured, and you can also claim a rebate of up to ₹50,000 on your health insurance premium paid during the financial year. This can reduce your out-of-pocket expenses during medical emergencies and keep your retirement funds intact.
How to Choose the Right Health Insurance for Senior Citizens
While buying a senior citizen’s health insurance policy, consider the following factors to make an informed purchase decision.
1. Policy inclusions and exclusions: Choose a comprehensive health policy/plan with more inclusions and fewer exclusions. In addition to basic coverage, such as hospital bills and pre and post-hospitalisation expenses, choose a policy that covers home healthcare, organ donor expenses, daycare procedures, OPD expenses, pre-existing conditions, specified diseases and AYUSH treatments. This will ensure better financial protection during medical emergencies.
2. Affordable premiums: Health insurance premiums increase with age. Therefore, do your calculations and choose an amount that will help you keep your policy active for long. If your health insurance premiums are on the higher side, you can opt for a copayment or deductible.
3. Network hospitals: Choose a reputed insurance company with a long list of network hospitals in the city, with a few in the vicinity. If there is a medical emergency, you can quickly reach the nearest hospital and opt for the finest treatment without fretting about the bills.
4. Waiting periods: Choose a health plan with a short waiting period for pre-existing conditions. This will help you use your health insurance policy sooner to cover your medical bills.
5. Claim settlement ratio: The claim settlement ratio (i.e., CSR) tells you about the credibility or reliability of an insurer when it comes to settling claims. Therefore, remember to check the claim settlement ratio of the insurance company for the last five-six years and choose one with a consistently high CSR. Non-settlement of claims defeats the whole purpose of investing in health insurance and creates financial woes during medical emergencies.
Conclusion
To sum up, if you are a senior citizen, you can claim a tax refund of up to ₹50,000 every year on your medical bills under Section 80D of the Income Tax Act. However, since healthcare expenses increase with age, it is advisable to stay covered under a healthcare plan or mediclaim policy for better financial security. Although you must pay premiums to keep your policy active, you can claim a tax rebate of up to ₹50,000 every year on the payments made.
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