In today’s world of booming prices and unexpected contingencies, one of the wisest investments to make would be in a health insurance plan. Health insurance is a systematic investment plan that seeks to protect the investor and/or his immediate family from incurring sudden and large medical expenses. Not only does it indemnify for medical bills that are now almost unaffordable but it also enables the investor to enjoy tax benefits on account of investment in such plans.
Saving tax makes for a great incentive at the time of making an investment decision. As such, a health insurance does not let its investors down. Up until the last financial year, section 80D allowed for a deduction not exceeding Rs 15,000 for an annual medical insurance premium payment. For senior citizens, a maximum amount of Rs 20,000 was deductible on account of the same premium payment. The 2015 Budget took into consideration the increasing cost of medical facilities and allied expenses and increased the deductible amount in both the above mentioned cases. Currently, investment in medical insurance premium allows an amount of Rs 25,000 to be deducted from the taxable income of the assessee. This translates to the calculation that an increased health insurance premium of Rs 10,000 saves taxes of Rs 3,000 for those in the 30% bracket and Rs 1,000 for those in the 10% bracket. As far as senior citizens are concerned, the limit has been raised to Rs 30,000 which is also in effect a Rs 10,000 increase from the previous year’s maximum allowed deduction.
Furthermore, the Budget has also addressed practical issues faced by Super Senior Citizens i.e those who are above 80 years of age. As assesses above 80 years usually find it difficult to invest in a Medical Insurance, the Budget has allowed for a deduction of not more than Rs 30,000 for Approved Medical Expenditure. However, if the assessee does continue to invest in a Health Insurance Plan, then the benefit of Rs 30,000 would include both insurance premium and Medical expenditure. Either way, the investor can enjoy a Rs 30,000 deduction from taxable income at the time of paying statutory taxes.
There are a few other ways that the Budget allows for saving tax. The National Pension Scheme and the Public Provident Fund are some of the investment schemes that allow for deductions from taxable income up to a certain limit. When fully exploited, these investments help an assessee save as much as Rs 69,000 in taxes. While these plans ensure reliable saving and returns, there is no parallel to the health insurance plan that indemnifies its investor against soaring medical prices – an inescapable event in every family. A beneficial investment, the medical insurance premium is recommended by the wise financial expert.