Since the past few years, the government is extending the purview of benefits under Section 80D of the Income Tax Act. Section 80D offers tax deduction towards payment of medical insurance or mediclaim premium.
Currently, an individual can claim a tax deduction of up to Rs. 25,000 a year for the medical insurance premiums paid for self, spouse and children. He or she can also claim an additional Rs. 25,000 for premium paid for parents. If parents are senior citizens, the deduction limit goes up to Rs. 30,000.
My advice to you would be, in the coming year, consider opting for multi-year health insurance policies, as not only will you be able to capitalize on the discount amount, it can also enable you to get several tax benefits as well. Why don’t we take a look at it;
One of the major benefits of opting for a multi-year health insurance plan is that your benefits accrue over a longer period of time and you have to renew your insurance policy every year. This also means that they will have to pay lesser premium for a multi-year health plan. Therefore, if you are opting for a yearly health insurance policy which renews every year, you will often find yourself paying premium at an escalating rate. Instead, if you opt for a multi-year health insurance policy – not only will your premium amount be locked, you will be able to attain the tax benefits for several years in a row.
Health insurers typically provide some discount if you pay premium for a few years upfront. But earlier, an individual could claim deduction only up to Rs. 25,000. Under the proposed changes in Budget, in case of single premium health insurance policies having cover of more than one year, deduction will be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified limit.
For example, your insurer is offering a 10% discount on health insurance premium, if you pay Rs. 40,000 for the two-year cover. Under the proposed changes, the individual can claim Rs. 20,000 in both years. Proportionate deduction in different years for premium paid for multiple years will also benefit taxpayers as it will allow them twin benefit of discount and deduction in the same year which could have been lost if the total premium exceeds the prescribed limit
Therefore this year, financial and insurance planning - We will recommend you to consider a multi-year health insurance plan, as the benefits will extend beyond providing insurance for your health.