മൾട്ടി-ഇയർ ഹെൽത്ത് ഇൻഷുറൻസ് പ്ലാനുകളിൽ നികുതി ആനുകൂല്യങ്ങൾ എങ്ങനെ ക്ലെയിം ചെയ്യാം?

Having a health insurance policy can bring many benefits. Along with coverage for medical emergencies, you can also enjoy tax advantages. As per current tax regulations, health insurance premiums can help you claim tax deductions under Section 80D of the Income Tax Act, 1961.

These deductions can be availed each financial year when you are filing your Income Tax Return or ITR. ** However, this process works a bit differently for multi-year health insurance plans. For the uninitiated, these plans work such that their tenure is valid for multiple years at a stretch.

So, there is no need to pay premiums or renew the plan every year. This can also mean that the yearly tax deduction process is carried out in a somewhat different way. Let’s see how.

Tax Benefit in Health insurance Plan

Health insurance plans offer significant tax benefits under various sections of the income Tax act. a major benefit is under Section 80D, which allows individuals to claim deductions on premiums paid for health insurance policies.

By investing in a health insurance plans, taxpayers can reduce their taxable income, thus lowering their overall tax liability. The maximum deduction limits vary, providing substantial savings and encouraging individuals to secure their health and finances.

Under Section 80D: Tax Exemption On Health insurance

Section 80D of the income Tax act provides tax exemptions on health insurance premiums paid for self, family, and parents. The deduction limit is up to ₹25,000 for individuals below 60 years and ₹50,000 for senior citizens. additionally, an extra deduction of ₹25,000 is available if the parents insured are also senior citizens.

This provision encourages people to invest in health insurance, ensuring financial protection against medical emergencies while availing of tax benefits. Thus, policyholders can enjoy comprehensive coverage along with significant tax savings.

How Do Tax Benefits Work with Multi-Year Health Insurance Plans?

To start with, we need to understand what the tax benefits are. Then, we take a look at how these tax benefits can be enjoyed with long-term medical insurance.

1. The premium paid for a health insurance policy every year can be used to claim tax deductions up to ₹25,000 if you are under 60 years of age. If you have taken a policy for parents who are over 60 years of age, then you can claim an additional deduction of ₹50,000. **

2. In a multi-year health insurance policy, the premium for multiple years is consolidated and paid as a single lump sum payment. This amount is naturally higher as compared to the regular annual premiums.

3. According to prevailing laws, the health insurance tax benefit amount in such a situation is to be determined proportionately for each year based on the duration of the policy. **

4. So, for instance, if a multi-year health insurance policy spans 2 years and premiums have been paid for the entire term, the tax deduction for each year would be 50% of the total premium amount.

Let’s use an example to understand this better: Let’s assume you have bought a multi-year health insurance plan with a tenure of 3 years.

The lump-sum premium you paid was ₹60,000 for the entire tenure. Now, the amount you can claim as a tax deduction under Section 80D would be ₹20,000 for each year. So, you can claim ₹20,000 in the first year, ₹20,000 in the second year, and ₹20,000 in the third year as well.

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Under Section 80D for multi-year health insurance, the lump-sum premium paid for a long-term policy is divided equally across the policy tenure. You can claim the deduction every financial year during the policy period. However, it will be subject to applicable deduction limits.

For example, if a taxpayer purchases a 3-year health insurance policy by paying the entire premium upfront, their premium will be proportionately distributed over 3 years for tax deduction purposes.

For example, let’s understand how this works in the table below:

ശ്രദ്ധിക്കുക: Tax savings are indicative and may vary. Please use discretion while reading.

The deduction under Section 80D remains subject to the maximum permitted limit:

1. Up to ₹25,000 annually for individuals below 60 years

2. Up to ₹50,000 annually for senior citizens

Additionally, you can claim tax deduction on family health insurance premiums for yourself, your spouse, your dependent children, and your parents if you pay the premium through non-cash modes.

Things to Know About Tax Benefits on Multi-Year Health Insurance

By now, you may have a clear idea of how you can claim medical insurance tax exemption. However, you should also keep the following points in mind when following the process:

1. The yearly tax deductions in a multi-year health insurance plan are subject to an upper limit of ₹25,000 and ₹50,000 depending on age. So, if your premium for a 4-year plan is ₹1,20,000, the maximum deduction you can claim yearly is not ₹30,000 but ₹25,000 only. This is applicable if the people covered under the plan are less than 60 years of age. **

2. Most insurance companies provide an 80D certificate to multi-year health insurance policyholders stating the amount they can claim for the year.

3. Some health insurance plans may cover parents-in-law as well. However, premiums paid for their coverage may not be considered valid for tax deductions.

4. To be eligible for this tax deduction, the premium must be paid in any payment mode other than cash.

5. The deductions under Section 80D are only applicable to taxpayers opting for the old regime. No deductions are available to claim under the new regime under Chapter VI A of the Income Tax Act **

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Single Year vs Multi-Year Health Insurance Plans: Which One Offers Best Value?

When choosing between annual and long-term health insurance policies, it is important to compare not only the premium outgo but also the tax savings available under Section 80D for multi-year health insurance. Multi-year plans may offer better long-term affordability due to premium discounts, uninterrupted coverage, and proportionate tax deductions.

Now you know the difference between single-year and multi-year insurance plans. Now, many people ask, ‘How do the benefits of multi-year translate to total premium outgo and tax savings?’

Here is a quick calculation to help you understand:

ശ്രദ്ധിക്കുക: Illustrative calculations based on applicable income tax rates under the old tax regime.

Benefits of Multi-Year Health Insurance Plans

Here are a few other advantages you can enjoy with a multi-year health insurance plan along with tax benefits:

No need for yearly renewal

With a multi-year plan, you no longer have to worry about renewing your plan every year. All you have to do is pay the premium once and the plan is valid for multiple years.

Locked premium

By paying the premiums for multiple years at once, you may ensure that you do not have to face premium hikes in any of those years. In most cases, if a hike is due, it may only become effective at the time of renewal. *

സേവിംഗ്സ്

Many insurance companies have savings offers on multi-year plans. This may help reduce your premiums if you buy one. ## To get an idea of the premium and how you can make a health insurance plan more affordable, you can use a health insurance premium calculator. Thus, opting for a multi-year health insurance plan can be beneficial in many ways. By paying an affordable premium for multiple years at once, you can enjoy peace of mind and tax benefits as well.

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ഉപസംഹാരം

In conclusion, multi-year health insurance policies offer the ease of long-term coverage without yearly renewals, as well as the right to proportionate tax deductions under Section 80D of the Income Tax Act. 

These deductions result in savings by reducing taxable income. The benefits, including coverage and tax, are paid out annually, even though the entire premium is paid up front. To maximise the tax benefits, simply make sure the premium payment is non-cash and in line with the previous tax system.

പതിവ് ചോദ്യങ്ങള്‍

Can i claim the entire premium paid for tax exemption every year in a multi-year policy?

Yes, you can claim a proportional amount of the premium paid each year for tax exemption in a multi-year policy. The total premium is divided equally over the policy years.

Should i pay an extra premium if premiums are hiked in a multi-year policy?

in a multi-year policy, the premium is usually fixed for the entire duration. if there is a hike, it does not affect existing policyholders until the policy is renewed.

is it advisable to take multi-year health insurance plans?

Multi-year health insurance plans can be advantageous as they lock in the premium rate and protect against annual hikes. They also reduce the hassle of yearly renewals and offer long-term financial security.

How to claim maximum tax benefits in a health insurance plan?

To maximize tax benefits, ensure you include premiums paid for yourself, your spouse, children, and your parents under Section 80D. additionally, opt for policies that cover preventive health check-ups, which are also eligible for tax deductions.

Can i claim tax benefits for employer-sponsored health insurance?

No, tax benefits under Section 80D cannot be claimed for premiums paid by the employer. However, if you contribute to the premium, that amount can be claimed for a tax deduction. 

* സാധാരണ ടി&സി ബാധകം. ** ടാക്സ് ബെനിഫിറ്റുകൾ നിലവിലുള്ള ടാക്സ് നിയമങ്ങളിലെ മാറ്റത്തിന് വിധേയമാണ്. ## ഇൻഷുറർ നൽകുന്ന എല്ലാ സേവിംഗ്സും ഐആർഡിഎഐ അംഗീകൃത ഇൻഷുറൻസ് പ്ലാൻ അനുസരിച്ചാണ്. സാധാരണ ടി&സി ബാധകം. ഇൻഷുറൻസ് പ്രേരണാ വിഷയമാണ്. ആനുകൂല്യങ്ങൾ, ഒഴിവാക്കലുകൾ, പരിധികൾ, നിബന്ധനകൾ, വ്യവസ്ഥകൾ എന്നിവയെക്കുറിച്ചുള്ള കൂടുതൽ വിവരങ്ങൾക്ക്, വിൽപ്പന പൂർത്തിയാക്കുന്നതിന് മുമ്പ് ദയവായി സെയിൽസ് ബ്രോഷർ/പോളിസി നിബന്ധനകൾ ശ്രദ്ധാപൂർവ്വം വായിക്കുക.