Health insurance has multiple benefits and one of those is tax savings. Before you can effectively use health insurance for tax saving and planning you should have a clearer understanding of the options that are available to you. Without having a complete understanding it may not be possible to make well informed decisions.
The premiums paid towards your health insurance is eligible for exemption from tax. A maximum exemption of Rs. 30,000 is allowed for exemption. Your savings will depend based on your tax bracket. If you are a senior citizen and if you are paying premium for your parents then you are eligible for exemption for up to Rs. 65, 000. This is the basic structure of tax savings. How much exactly you save per year will depend on the premium that you pay and your respective tax slab.
When it comes to tax planning health insurance, India offers many choices. You will certainly be confused with the myriad options that are before you. In order to pick the best option for tax planning health insurance India has to offer you need to first understand your requirements correctly and also the options that are available to you. Only when you have both you will be able to correctly match the requirements with the insurance schemes available.
Before purchasing your policy, you should check whether it is good to go with individual policy or for family floater. It is also good to take into account the entire family income if your spouse is also working. At times when both people are working, it will prove to bring more savings with individual policies instead of family policy. When you are dividing the premiums between two salaries, the person with the higher tax slab should have the highest exemption possible. Before blindly sign up for one or the other policy, try to explore different permutations to ensure that you have the maximum tax savings possible.
People often confuse mediclaim with health insurance policies. Even though to a certain extent cater to the healthcare needs of you and your family, mediclaim is very limited and rigid when compared to a health insurance policies. Mediclaim covers fewer number of illnesses. So you need to decide whether you are going to use mediclaim or other health insurance policies. Many people consider and use mediclaim as synonym of health insurance which is an incorrect representation of both.
Health insurance policies covers larger number of illnesses therefore it provides you with better health cover. In other words it is more comprehensive when compared to mediclaim. You will still get the same level of tax exemption from health insurance. Therefore when you are planning tax, it is important that you are clear with these schemes and that you choose health insurance policies over mediclaim.
Give yourself enough time to understand different schemes, the policy features and other terms and conditions when you are considering tax planning health insurance options.