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TAX Benefits

As per Income Tax guidelines, you will be eligible for an additional deduction of Rs. 15,000 if you have taken a mediclaim policy on your parents (in case your parents are senior citizens then the Tax benefit will extend to Rs. 20000). In your case, since your parents are not senior citizens, you will be eligible for tax exemption of Rs.15000 u/s section 80D.On remaining amount i.e. Rs. 2,500 (17500-15000), you cannot claim any tax benefit.

DEDUCTION U/S 80D MEDICLAIM POLICY (HEALTH POLICY) PREVENTIVE HEALTH CHECK UP

Deduction under section 80D is available for medical claim policy By individual for family and HUF for their members . Other details regarding 80D and medical insurance there under is given below

  1. Addition to section 80 C:Section 80D is available other than 100000 deduction available under 80C for life insurance,ppf,gpf,tuition fee,ULIP,House loan repayment etc.
  2. Insurer covered:This deduction is available for medical claim policy which should be framed in this behalf by
    • by GIC(General insurance Corporation) or by
    • any other insurer but approved by IRDA(Insurance Regulatory Development authority)
  3. Available to :Deduction is available to 
    • Individual (resident or non resident ,Indian Citizen or foreign citizen)
    • HUF(Hindu undivided Family may be resident or non resident)
  4. Mode of payment:Insurance Premium should be paid by any mode other than by Cash .Means if insurance premium is paid by cash then deduction is NOT available.Before Assessment year 2008-09 ,only payment by cheque was allowed under this section but from Ay  2008-09 onwards the deduction is allowed by other mode also like online payment which is now a days is very popular or by credit card is also allowed.
  5. Out of Income :The amount should be paid out of the income chargeable to tax.
  6. Proposer of the policy is not must:The premium is to be paid to effect or keep inforce insurance policy  ,there is no condition that assessee should be the proposer of the policy ,
  7. Partly contribution: Assessee can  partly contribute the premium amount but amount should be paid directly to insurance company and paid through mode other than by cash (see example)
  8. Insurance cover on?:First deduction given below :Insurance Premium may be paid for medical claim insurance policy for assessee himself or spouse or dependent children or any combination of three.
  9. Addition for parents:Second deduction given below:Insurance premium may be paid for medical claim insurance for assessee parents (father or mother or for both)
  10. Deduction upto 40000:Theoretically ,maximum deduction can be claimed for Rs 40000.(detail as given below)
  11. Deduction of Preventive health checkup :A sub limit of 5000/- has been allowed wef financial year 2012-13 for preventive health check up for self ,spouse and dependent children and parents .Preventive health check up amount  can be paid through any mode including cash mode(read more about preventive health check up u/s 80D up to 5000/-)

Amount Of deduction  : Two type of Deductions are available to Individuals under this section from  Assessment year 2009-10 onwards (also available in in current financial year 2012-13)

Sl. No.
Persons for whom payment made
Nature of payment
Mode of payment
Allowable Deduction (in Rs.)
1
Employee or his family
♦  the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family or
♦  any contribution made to the CGHS or
♦  any payment on account of preventive health check-up of the employee or family, [restricted to Rs. 5000/-; cash payment allowed here]
any mode other than cash
 
 
 
 
 
 
 
 
Cash mode is also allowed
Aggregate allowable is Rs. 15,000/{For Senior Citizens it is Rs. 20000/-}.
2
Parent or Parents of employee
  ♦  the whole of the amount paid to effect or keep in force an insurance on the health of the parent or parents of the employee or
  ♦  any payment made on account of preventive health check-up of the parent or parents of the employee [restricted to Rs. 5000/-; cash payment allowed here]
any mode other than cash
 
 
 
 
 
 
Cash payment allowed
Aggregate allowable is Rs. 15,000/ than {For Senior cash Citizens it is Rs. 20000/-}


Deduction to HUF: Deduction to HUF is available on insurance premium paid for policy taken for  of any member of the  HUF

Addition deduction for Resident Senior Citizen:In addition to two point above,  additional deduction of Rs 5000 is available where assessee or his spouse (wife or husband) or dependent parents or any member of the family in case one and father or mother is a resident in India and a senior  citizen in case two.And same in the case of HUF assessee if policy  has been taken on member which is senior citizen than additional Rs 5000/- deduction is available also to HUF.

Senior citizen means who is at least of 65 year of age or more at any time during the previous year.
Update : Age Limit for Senior Citizen has been proposed to be reduced to 60 Year wef financial year 2012-13 through Finance Bill 2012

Example : An individual assessee pays (through any mode other than by cash) during the previous year medical insurance premium as under

  1. Rs 12000/- to keep in force an insurance policy on his health and on his wife and dependent children
  2. Rs 17000/- to keep in force an insurance policy on the health of his parents.

According to above provisions he will be allowed of Rs 27000/-(12000/- +15000/-) if neither of his parents is senior citizen .however if any of his parent is a resident senior citizen ,he will be allowed a deduction of 29000(12000+17000) .whether the parents is dependent or not is not a consideration for deciding the deduction under section 80D(from assessment year 2009-10 )(previous year 2008-09)

Further, in the above example ,if cost of insurance on the health of the parents is 30000/- out of which Rs 17000/- is paid (by any non cash mode) by the son and rs 13000/- by the father (who is senior citizen), out of their respective taxable income ,the son get the deduction of Rs 17000/- (in addition to deduction of Rs 12000/- for the medical insurance on self and family) and the father will get deduction under section Rs 13000/-
(Example as given in Finance Act 2008)

Deduction of Preventive health checkup :A sub limit of 5000/- has been allowed wef financial year 2012-13 for preventive health check up for self ,spouse and dependent children and parents .Preventive health check up amount  can be paid through any mode including cash mode(read more about preventive health check up u/s 80D up to 5000/-)

Hope it will be now easy to understand the section 80D deduction.


If you are looking to buy a health insurance policy in India (also referred to commonly as Mediclaim policy), you must understand the coverage you can get from the policy so that you can compare the different plans. Typical benefits from health insurance or mediclaim policies in India fall under the following categories: 

  • Hospitalization Cover or in-patient expenses: Protects the insured person or family (in case of family floater plan) for in-patient hospitalization expenses as a result of suffering illness or bodily injury during the period of insurance, which on the advice of a medical practitioner requires hospitalization. These include room and boarding charges as per policy conditions.
  • Day care expenses or out-patient expenses: Day Care expenses incurred on advanced technological surgeries and procedures like Dialysis, Radiotherapy, and Chemotherapy, requiring less than 24 hours of hospitalisation.
  • Doctor’s fees, Specialists’ fees, Anaesthetist fees, Surgeon’s fees
  • Nursing Expenses
  • Cost of Medicines and Drugs: This may include Anesthesia, Blood, Oxygen, Operation Theatre Charges, Surgical Appliances, Medicines and Drugs, Diagnostic Materials and X-ray, Dialysis, Chemotherapy, Radiotherapy, Cost of Pacemaker, Artificial Limbs and Organs and similar expenses.
  • Nursing Expenses
  • Maternity Expenses: Costs incurred during child-birth are covered under this category. Different limits for coverage are typically applicable for Normal Delivery and Caesarean Delivery. Note that most policies cover maternity expenses only after a waiting period of a few years such as 4 years and 6 years. In other words, a policy holder needs to hold the policy for a certain number of years before the maternity expenses are covered by the health insurance policy.
  • Pre-Hospitalization Expenses: Pre-hospitalisation means relevant medical expenses incurred during a period up to certain (typically 30) days prior to hospitalization for an illness or bodily injury sustained and considered a part of a claim admissible under the policy. For example, a person maybe required to undergo certain tests to confirm the disease for which he or she is eventually hospitalized. The Doctor’s consultation fees for this, the expenses on tests and medicines prior to hospitalization for that particular disease fall under the category of Pre-hospitalization expenses. Typically, health insurance policies cover expenses for a certain number of days (most policies cover for 30 days) for Pre-hospitalization.
  • Post-Hospitalization Expenses: Post Hospitalisation means relevant medical expenses incurred during a period up to certain (30, 45, 60 etc.) days after hospitalization for an illness or bodily injury sustained and considered a part of a claim admissible under the policy. Follow up consultations with specialists, medicines and test expenses after a person has been hospitalized and discharged fall under the category of Post-hospitalization expenses. Typically, health insurance policies cover expenses for a certain number of days (30, 45, 60 etc.) for Post-hospitalization.
  • Emergency Ambulance Expenses: Costs incurred in transporting a insured patient to the hospital subject to limits and other conditions specified in the health insurance policy.
  • Daily Cash for accompanying an insured child: If a insured child requires hospitalization, some policies provide daily cash to the accompanying adults.
  • Domiciliary Treatment: These are costs incurred for treatment of patients at home. Most insurance policies cover domiciliary treatment if it is based on a doctor’s recommendation and within certain limits set under the health insurance policy.
  • Spectacles, Contact Lenses, Hearing Aids: Typically covered only in premium policies.
  • Outpatient Dental Treatment: Typically covered only in premium policies and only after a certain waiting period.
  • General Health Checkup: Costs incurred for periodic health checkup that is not triggered by any illness. Typically policies cover this for a small (1 or 2%) percentage of the sum assured once every 2 or 3 years. Some of the medical tests covered by this include Medical Examination Report, Blood grouping and Rh Typing, Hb%, Blood Count, Fasting Blood Sugar, ECG and Urine Routine. Check with insurance company for complete coverage details.
  • Cashless Hospitalization or Claim: If you have a health insurance policy that supports cashless hospitalization, it means that you can get medical treatment just by displaying your insurance card without paying any cash to the hospital. Most health insurance policies offer this benefit. However, the benefit is restricted to a certain list of hospitals specified by the health insurance company along with its policy. If you visit a hospital in-network (within the list provided by the health insurer), then you do not have to pay any cash for relevant medical expenses. You may still have to pay for expenses that are not covered by the policy rules. However, if you are admitted to a out-of-network hospital, you most likely will have to pay cash for your treatment. Depending on the policy, you may get reimbursed for such treatment by submitting a expense report to the health insurance company or its Third party Administrator (TPA). Cashless hospitalization or claim is a critical element of any health insurance policy.For cashless hospitalization, policies may require the Insured to contact the TPA at least 48 Hours before a planned hospitalization. In an emergency situation, the rules for when the TPA must be intimated may be different.
Benefits