Individuals, including senior citizens, can avail tax benefits for a multi-year health insurance policy by adhering to the following guidelines:
Premium Payment: Ensure timely payment of premiums for the multi-year health insurance policy. Premiums paid for health insurance policies are eligible for tax deductions under Section 80D of the Income Tax Act.
Claiming Deductions: Individuals can claim deductions for premiums paid towards health insurance policies for themselves, their spouse, dependent children, and parents. Senior citizens can claim higher deductions compared to non-senior citizens.
Maximum Deduction Limits: The maximum deduction limit for health insurance premiums paid for self, family, and parents is as follows:
- For individuals below 60 years: Up to INR 25,000
- For senior citizens (aged 60 years or above): Up to INR 50,000
- Additional deduction for premiums paid for parents (if they are senior citizens): Up to INR 50,000
Aggregate Deduction: The aggregate deduction under Section 80D (for premiums paid towards health insurance for self, family, and parents) cannot exceed INR 100,000 in any financial year.
Multi-Year Policy Premium: If an individual opts for a multi-year health insurance policy, the premium paid for the entire policy term can be considered for claiming deductions in the financial year in which it is paid.
Year-wise Distribution: In case the premium payment for the multi-year policy is made in different financial years, the tax benefits can be claimed proportionately for each year based on the premium paid in that particular year.
Receipts and Documentation: Maintain proper documentation of premium payments and policy documents. This includes premium receipts, policy schedule, and any communication with the insurance provider regarding premium payments.
Tax Filing: While filing income tax returns, ensure to accurately disclose the premiums paid towards the multi-year health insurance policy and claim deductions under Section 80D accordingly.
Review Policy Terms: Before opting for a multi-year health insurance policy, review the terms and conditions, coverage benefits, and premium payment schedule to ensure it aligns with your requirements and financial goals.
By adhering to these steps and guidelines, individuals and senior citizens can effectively claim tax benefits for a multi-year health insurance policy while ensuring compliance with tax laws and regulations.
