Tax saving of up to ₹15,600 due to higher mediclaim deduction
The Union Budget has many proposals that would cheer up the senior citizens. And, one of the biggest of these reasons is the increase in deduction limit under section 80D of the income-tax Act—under which one can avail benefits for payment of health insurance premiums.
The premiums that you pay towards a health insurance policy qualify for tax deduction. The Union Budget 2018 has proposed to increase this deduction for senior citizens from up to ₹30,000 to a maximum of ₹50,000. This change would be applicable for the financial year 2019. For someone in the highest tax bracket of the tax savings would be up to ₹15,600, compared to ₹9,270 now.
“On an average, senior citizens pay around ₹10,000 as premiums but the health insurance cover is insufficient given the rising healthcare costs and their increased medical attention. Increasing the deduction limit in that sense will encourage senior citizens to buy a higher health insurance policy, which is the need of the hour,” said KG Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance Co. Ltd.
For individuals who are below 60 years of age, no change has been proposed. The deduction under section 80D, for them, continues to be ₹25,000. “Ideally, for the general segment too we were expecting a hike in the deduction limit that is aligned to medical inflation. An ideal insurance cover for a family of four in a metro is about ₹15 lakh and the premium a 45-year-old will need to pay is definitely more than ₹25,000,” said Sandeep Patel, chief executive officer, Cigna TTK Health Insurance Co. Ltd. But you can benefit if you have senior citizen parents and you pay premiums on their behalf. Under section 80D you can claim a deduction for health insurance bought for self, spouse and children. In addition to this, you can claim a further deduction for policies bought in the name of parents.
So if the parents are below 60 years of age, the total deduction available to you is ₹50,000. The budget 2018 makes no changes
NEWDELHI: RAJESH SUD, EVC & MD, Max Life insurance Co. Ltd
here. But if your parents are senior citizens, above 60 years, you can claim an additional deduction of up to ₹50,000—taking the total deduction to ₹75,000. This deduction limit includes the preventive health check-up limit of ₹5,000. Senior citizens can now claim a deduction of ₹50,000 towards medical expenditure, instead of claiming the benefits of paying health insurance premiums. The Union Budget has also increased the limit of deduction for medical expenditure for self, spouse, dependant parents, children and siblings.
KUMAR SHARADINDU, MD & CEO, SBI Pension Funds Pvt. Ltd