MEDICLAIM POLICY AND TAX BENEFITS

Mediclaim insurance offers both tax savings and medical cover. You can insure against medical expenses of yourself or dependents. Mediclaim cover provides security to meet unanticipated medical expenses. These policies are offered by almost all insurance companies.

They provide insurance cover for the treatment of most ailments with hospitalisation. In addition to the basic cover, there are addons available on payment of an extra premium. You should go through the cover and exclusion clauses carefully. In some cases, preexisting ailments are also covered on payment of an additional premium. The cover may be enhanced to ailments not normally covered also. Some insurance companies provide cover for day-care and annual medical check-ups as well.

The premium paid for mediclaim policies is tax deductible. Under the Income Tax Act, exemption is available for the amount contributed towards medical insurance premium. This is provided under Section 80D of the Income Tax Act. According to these provisions, premium paid towards a mediclaim insurance is deducted from the total income of an assessee. The deduction is available only to individuals and Hindu Undivided Family members.In case of an individual, the amount deductible includes any sum paid for insurance on his health, on the health of his spouse, dependent parents or dependent children. The dependence of parents will have to be proved in order to claim the exemption. Dependence will be evident in case the own resources of the parents are not sufficient to support them.

In case of a Hindu Undivided Family, the amount deductible includes any sum paid for insurance on the health of any member of the family.

In order to claim this deduction, the amount should be paid by cheque. Also, the amount should be paid in the relevant previous year. It should be paid out of income chargeable to tax. The scheme of insurance should be approved by the General Insurance Corporation of India. Moreover, the insurance should be approved by the Central Government.

According to the Income Tax Act, the limit eligible for deduction is Rs 15,000. In some cases, an enhanced deduction of Rs 20,000 is allowed, provided the insured is a senior citizen. Senior citizen means a person who is resident in India and at least 65 years of age at any time during the previous year.

The scheme of deduction has been further modified with effect from the assessment year 2009-10 to encourage individuals to supplement the efforts of their parents in getting medical cover. Accordingly, an additional deduction of Rs 15,000 will be allowed to an individual on any payment made for an insurance on the health of his parents, irrespective of the fact whether they are dependent on him or not. This deduction would be in addition to the one on the insurance of the assessee himself, his wife or children
source:The Economic Times