Under section 80D, the premiums paid towards a health insurance policy for self or family can be claimed as a deduction of up to ₹25,000. If you also pay premiums for your parents who are not senior citizens—less than 60 years of age—then you can claim an additional deduction of ₹25,000. So the total deduction that you can claim is ₹50,000, which translates into a tax saving of ₹15,450.
For senior citizens, the deduction limit is ₹30,000. But if you are buying a health insurance policy for your parents who are senior citizens then you can claim a deduction up to ₹55,000—₹25,000 for self and ₹30,000 for parents. Keep in mind that this deduction limit includes expenses incurred towards preventive health check-ups to a maximum of ₹5,000.
In the case of very senior citizens who are above 80 years of age and don’t have health insurance, they can claim a deduction up to ₹30,000 on expenses incurred on medical expenditure.
In health insurance what you need is an indemnity policy that will pay for your hospitalisation expenses including pre- and post-hospitalisation costs. Buying an adequate cover is essential. Keep in mind that medical inflation is about 15-20%. So whatever you think your health insurance need is today, buy a cover that’s 4 to 5 times that.
You need to buy adequate health insurance and ensure your plan has the least number of restrictions. Buy a policy with a lower waiting period and no caps on room rents.
To make health insurance cost-efficient, families could consider floater policies. A floater policy considers the entire family as one unit, so whoever makes a claim the sum insured reduces by that much for the entire family in the year. However, it’s advisable to not include a very elderly person or someone with a pre-existing ailment as it’s not cost-efficient.
You can also buy top-up plans to buy extra insurance at a lower cost. A top-up is a regular indemnity plan that covers hospitalisation costs but only after a threshold— the deductible—is crossed.