World Health Day 2024: Maximising Health and Wealth

World Health Day is celebrated on April 7th each year to mark the founding of the World Health Organization (WHO) in 1948 and to draw attention to global health issues. The day serves as an opportunity to focus worldwide attention on important aspects of global health, where each year, WHO selects a theme that highlights a priority area of public health concern in the world.

In India, the government encourages its citizens to promote health through various tax incentives, notably through Section 80D of the Income Tax Act. This provision allows taxpayers to avail deductions on health insurance premiums, making health coverage more accessible and fostering a culture of preventive healthcare.

Introduction to Section 80D

At the core of Section 80D is the government’s intention to make health insurance accessible and affordable. It allows deductions up to ₹25,000 for health insurance premiums paid for oneself, spouse, and dependent children. For senior citizens, this limit is elevated to ₹50,000, recognising the higher costs associated with healthcare in older age. Additionally, taxpayers can avail themselves of deductions for preventive health check-ups to the tune of ₹5,000, which is part of the overall deduction limit.

Who is Eligible?

At the heart of tax planning, is Section 80D. This provision in the Income Tax Act is specifically designed to encourage individuals to invest in health insurance policies. Here’s a simple breakdown:

• Eligible Taxpayers: Individual taxpayers and Hindu Undivided Families (HUFs).
• Coverage: Health insurance premiums for self, spouse, dependent children, and parents.

Tax Deduction Details

Key Highlights

• Total Deduction Limit: Up to ₹1 lakh, combining all eligible categories.
• Additional Deduction for Parents: Encourages coverage for parents with a higher deduction limit for senior citizens.

Maximising Your Tax Savings: A Strategic Approach

1. For the Young and the Elderly

The beauty of Section 80D is its inclusivity. Whether you’re investing in health insurance for yourself and your nuclear family or for your elderly parents, the benefits are tangible. The law recognises the increased medical needs of the senior citizen demographic, offering a higher deduction limit.

2. Embracing Preventive Care

The emphasis on preventive health check-ups under Section 80D is a testament to the adage, “prevention is better than cure.” By allocating a deduction for these expenses, the government nudges citizens towards early diagnosis and health monitoring, potentially saving lives and reducing the financial strain of treatments.

Illustrating the Impact: A Real-Life Scenario

Consider the case of a typical family: two adults below 60, two children, and elderly parents. Between health insurance premiums and preventive health check-ups, the potential for tax deductions is significant. Let’s say the family spends ₹30,000 on premiums and ₹15,000 on check-ups. The total deductions could significantly lower their taxable income, illustrating the dual benefits of health insurance: financial security and tax savings.

Understanding Tax Benefits on Health Insurance and Medical Costs

When you buy health insurance for many years in one go, you can save some money both on the insurance and your taxes. If you pay all the money for the insurance at once, you can still get a tax break with Section 80D, up to ₹25,000 for most people and ₹50,000 for older people.

• Helping Senior Citizens with Medical Bills: Older people, like your grandparents, can get a tax break up to ₹50,000 for their medical bills, even if they don’t have health insurance. For example, if Mr. Anurag spent ₹70,000 on his parents’ health care, he can claim a tax break on ₹50,000 of that amount.
• Support for Disabilities and Serious Illnesses: If you spend money on taking care of a family member with a disability, you can get a tax break. The amount can be up to ₹75,000 or even ₹1,25,000 if the disability is very serious, but you need to show a certificate from the government.
• Dealing with Major Health Problems: If you have major health issues like kidney failure, cancer, or Parkinson’s disease, you can claim a tax break up to ₹40,000 or ₹1 lakh for older people. This helps with the costs of treating these serious conditions.
• Protection from Critical Illnesses: Health emergencies can happen without warning and can cost a lot. Things like cancer or heart attacks can be very expensive. If you don’t have health insurance, you’ll have to pay all the costs yourself. That’s why some choose to get extra coverage for these big health problems. The money you pay for this extra insurance can also lower your taxes with Section 80D.

Claiming the Deduction

Claiming a tax deduction under Section 80D is straightforward. You just need to show proof of your payments for health insurance and preventive health check-ups. This helps lower the total income you must pay tax on, whether you’re an individual, a family, or part of a Hindu Undivided Family (HUF).

To get these deductions, you can either give the receipts of your insurance payments and medical bills to your employer or include them when you file your Income Tax Returns (ITR).

Benefits of Section 80D

• Tax Savings: Reduces taxable income through deductions on health insurance premiums and preventive health check-ups.
• Encourages Preventive Healthcare: Highlights the importance of early illness detection and prevention.
• Financial Security: Mitigates the financial impact of health emergencies.

Comparing Section 80D with Section 80C

Exclusions and Points to Remember

• Premiums Paid in Cash: Not eligible for deduction (except for preventive health check-ups).
• Employer-Paid Premiums: Excluded if the employer covers the full premium amount.
• Non-Eligible Relationships: Premiums for siblings, working children, or other relatives are not deductible.

The Significance of World Health Day

World Health Day is significant as it raises awareness about global health issues, urging us to prioritise our well-being. It highlights the importance of preventive healthcare measures and access to medical services. Additionally, it serves as a reminder to consider the necessity of health insurance in protecting our health and finances during medical emergencies. 

Under Section 80D, health insurance premiums are incentivised, promoting investment in healthcare. By connecting World Health Day with the importance of health insurance and Section 80D, we emphasise the crucial role of both awareness and financial security in maintaining good health worldwide.

Conclusion

World Health Day reminds us of the importance of prioritising our health and well-being globally. It highlights the significance of preventive healthcare measures and access to medical services. 

Through Section 80D, the government incentivizes investment in healthcare by providing tax benefits on health insurance premiums. By understanding and utilising these provisions, we can protect our health and ensure our financial resilience, contributing to a healthier, more secure future for ourselves and our loved ones.

Disclaimer: This article has been written for educational purposes only. The securities quoted are only examples and not recommendations.