5 Ways Medical Expenses Help You Save Taxes
Hectic routines and sedentary lifestyles have burdened our life with a number of lifestyle diseases. The deteriorating health conditions due to these, coupled with the rising healthcare expenses, can eat into your savings. Considering this, purchasing a mediclaim policy should be at the top of your investment list. As per the Income Tax guidelines, investing in medical insurance is important, if you want to enjoy tax benefits. That is why buying medical insurance for yourself or your family can help save you, not only from financial liabilities during medical emergencies but also from tax liabilities.
Every financial planner would recommend that you begin financial planning by choosing a suitable health insurance policy. To achieve your financial goals, it is important that you start saving as early as possible, and buying a health insurance plan can help you save money in the form of tax deductions.
Here’s how medical expenses could help you save on taxes:
1. Regular Medical Expenses
If you happen to be an employee, then reimbursements on medical expenses up to Rs. 15, 000 is exempted from being taxed. The medical expenses can be in the form of pharmacy bills, medical checkup bills or doctor consultation fees. These expenses could be for anyone in your family, yourself, your spouse, your children or your parents. The proof you need to be submitting for claiming the exemption is original bills/receipts as per the process outlined by your employer.
2. Preventive Medical Checkup
You claim deduction on charges paid to conduct any preventive medical tests for any member of your family. You can claim a deduction of up to Rs. 5,000. To help you maximize this deduction, many pathological laboratories now provide check-ups of Rs. 5,000 flat. You will need to submit the original invoice or receipt from the laboratory to your employer
3. Maintenance or Medical Treatments for Disabled Dependents
Having a dependent with disabilities can be emotionally taxing as well as financially draining for a person. In this regard, Section 80DD of the Income Tax Act 1961 provides for a fixed deduction of Rs. 50,000 in case you have a dependent with disabilities. The dependent can be your spouse, child, parent, brother or sister. If the disability is more than 80 percent, then one can claim Rs. 1 Lakh per annum as a deduction on the taxable salary. To claim the deduction, you will need a medical certificate of disability from a government hospital certifying the same (The certificate will need to be renewed periodically). You will also need a self-declaration on account of medical treatment, training and other medical expenses incurred on the dependent. With that said, you don’t need to preserve the original bills and receipts.
4. Medical Treatment for Dependents with Specified Diseases
You could claim a deduction if you or your dependent family member suffers from specified diseases with disability levels of more than 40 percent. The claim can be made under Section 80DDB of the Income Tax Act. The specified diseases include cancer, AIDS, chronic renal failure, hemophilia, thalassemia, and neurological disorders. The extent of the deduction depends on the age of the dependent. The proof required for claiming the deductions is Form 10-1 from a relevant specialist doctor, a prescription for medical treatment, bills for the treatment.
5. Health Insurance for Family
Modern lives are plagued by a number of lifestyle diseases. With a rise in such maladies, hospitalization or healthcare expenses have become one of the biggest financial risks one can be exposed to. As an incentive for purchasing health insurance, Section 80D, provides for exemption on health insurance up to Rs. 70, 000. This exemption can be availed on family health insurance too. You need to submit a policy copy with the premium receipt and the premium should be paid from your bank account to avail the deduction.
Purchasing a health mediclaim policy does help you save tax, but remember, tax savings are secondary; you should be buying health insurance to ensure that any medical emergency doesn’t set you back financially.
**To understand exactly about the policy coverage, exclusions, etc read the Policy Wordings carefully.**