Save on tax while insuring your health

By Tensing Rodrigues*

You will consider me a fool if I tell you that health insurance insures your health. Well it does not just as life insurance does not insure your life. What life insurance does is to insure your dependents against financial distress in case of your death. That is, it pays for the sustenance of your dependents when your income stops due to your death. In a similar manner health insurance pays for some of your medical expenses in case you fall sick.

But you can indeed insure your health by regular preventive health checkups besides the three best insurance policies against sickness, viz. healthy diet, vigorous physical activity and stress free lifestyle. And now health checkups also save tax. Section 80D which provides tax saving for health insurance premia has a small provision for preventive health checkups. Further up to Rs 5,000 spent on health checkups is deductible under the overall limit of Rs. 25,000 under Section 80D.  And you need not even have a health insurance policy or pay any health Insurance premia. Just do a preventive health checkup and you can claim a deduction up to Rs 5,000.

That’s a win-win situation. I would say kill two birds with one shot. Health checkup packages are available at different clinics, labs and hospitals. Choose one for yourself with extreme diligence. Make sure the place you go to is reliable. Go to a place that will put you through the tests with utmost integrity. Not everyone does it up to the mark. Ask a doctor you trust or rely on your personal experience. If you do not have any health insurance premia to pay then utilize the entire Rs 5,000 for a preventive health checkup. Do a complete checkup. Here again, the doctor should be able to guide you. You can do it as a package or as individual investigations as advised by your doctor. In a package the investigations cost a little less.

For your benefit let me share with you the relevant excerpts from Section 80D: “(1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax. (2) Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—(a)  the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or any payment made on account of preventive health check-up of the assessee or his family as does not exceed in the aggregate twenty-five thousand rupees; and (b)  the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee or any payment made on account of preventive health check-up of the parent or parents of the assessee as does not exceed in the aggregate twenty-five thousand rupees;

(2A) Where the amounts referred to in clauses (a) and (b) of sub-section (2) are paid on account of preventive health check-up, the deduction for such amounts shall be allowed to the extent it does not exceed in the aggregate five thousand rupees.

(2B) For the purposes of deduction under sub-section (1), the payment shall be made by  (i)  any mode, including cash, in respect of any sum paid on account of preventive health check-up;

This is not to imply that you should not buy Health Insurance. Health Insurance has its own place in your financial plan. But do not buy Health Insurance to save tax; buy it if you feel you need it. And you need it if the burden of medical expenses in case you are afflicted with a major health problem is likely to be beyond your means. In other words, Health Insurance should cover only major medical expenses. For the rest, fall back upon your regular income. And as you go, save to make a provision for meeting health expenses in later life.

*The author is an investment consultant. Readers can send their comments and queries to investment.ideas.shop@gmail.com