Health Insurance Tax Benefits 2018-19 With Automated Master of Form 16 For F.Y.2018-19

There are certain changes to Health Insurance Tax Benefits 2018-19 (AY 2019-20) after the Budget 2018. Many of us have health insurance either from our employer or on our own. However, we forget to claim a few tax benefits. Hence, let us understand these changes in detail.

We all know the importance of health insurance in today’s costly medical hospitalization. Hence, it is imperative for many of us to buy health insurance. Otherwise, your one hospitalization of few days may dry up your whole emergency corpus.

Who can claim Health Insurance Tax Benefits under Sec.80D?

If you are paying the premium against health insurance in the name of below-mentioned family members, then you can avail the Health Insurance Tax Benefits under Sec.80D.

  • Self
  • Spouse
  • Your Parents (Dependent or not dependent)
  • Dependent children

Budget 2018 – Health Insurance Tax Benefits 2018-19 (AY 2019-20) changes

As I mentioned earlier in Budget 2018, Government made some changes to Health Insurance Tax Benefits. Hence, first let us revamp those changes.

# The maximum tax deduction limit for senior citizens under Section.80D of IT Act was raised to Rs.50,000 from the existing Rs.30,000.

# As of FY 2017-18, Very Senior Citizens (who are above 80 years of age), can claim a deduction of up to Rs.30,000 incurred towards medical expenditure, in case they don’t have health insurance. However, in the Budget 2018, it has been increased to Rs.50,000. Even individuals who pay premiums for their dependent senior citizen’s parents can claim the additional deduction on health insurance premium (or) medical expenditure

# In case of single premium health insurance policies having the cover of more than one year, the deduction is allowed on a proportionate basis for the number of years for which health insurance coverage is provided, subject to the specified monetary limit under Sec.80D.

Assume that your health insurance yearly premium is Rs.50,000. However, if you go for a two-year premium paying in advance, then the health insurance company is offering you the discount of Rs.3,000 i.e. for two years it the premium will be Rs.47,000.

Earlier, you are allowed to claim the deduction under Sec.80D in the financial year in which you paid the premium and that also as per the specified limits of Sec.80D. However, from FY 2018-19, you can claim the tax benefits under Sec.80D proportionately for two years. It means for the first year you can claim Rs.23,500 and next year another Rs.23,500.

Health Insurance Tax Benefits 2018-19 (AY 2019-20)

Now let us discuss more Health Insurance Tax Benefits 2018-19 (AY 2019-20).

Health insurance premium paid for Self, Spouse or dependent children is tax deductible up to Rs.25,000. However, if any one of the persons mentioned above (Self, Spouse or dependent children) is a senior citizen and Mediclaim Insurance premium is paid for such senior citizen then the deduction amount will be Rs.50,000 from FY 2018-19 (AY 2019-20).

Same way, health insurance premium paid towards parents is eligible for deduction up to Rs.25,000 under Sec.80D. However, if anyone of your parents is senior citizens (above 60 years of age), then the limit is Rs.50,000.

For senior citizens above the age of 60 years, who are not eligible to take health insurance, the deduction is allowed for Rs 50,000 towards medical expenditure.

Let me tabulate the same as below.

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As I said above, along with above said benefits, very Senior Citizens (who are above 80 years of age), can claim a deduction of up to Rs.30,000 incurred towards medical expenditure, in case they don’t have health insurance. However, in the Budget 2018, it has been increased to Rs.50,000.

Budget 2018 – Standard Deduction in-lieu of Medical Allowance

Earlier you used to get a medical allowance of up to Rs.15,000 as an exempted benefit. To claim this benefit you have to submit the medical bills. However, effective from FY 2018-19, a standard deduction of Rs.40,000 in lieu of travel, medical expense reimbursement, and other allowances are available for salaried employees and pensioners.

To claim this standard deduction, there is no need to submit medical bills to your employer.

Irrespective of the amount of taxable salary you will be entitled to get a deduction of Rs.40,000 or taxable salary, whichever is less.

Hence, let us say a person has worked for few days (or) months and his salary was just Rs.30,000 for a financial year, then he will be entitled to a deduction equal to salary, which is Rs.30,000. Because it is less than the standard deduction of Rs.40,000.

If his salary in a financial year is Rs.3,00,000, then he can claim the standard deduction of Rs.40,000. Because in this case, the salary is more than the standard deduction.

Few points before you avail Health Insurance Tax Benefits 2018-19 (AY 2019-20)

# The premium amount should be paid in non-cash mode only. If you paid the premium through cash mode, then you are not allowed to claim the deduction under Sec.80D.

# Meaning of Dependent Children in case of a male is that you can claim tax benefit on health insurance premium paid towards your male children up to 25 years of age (if he is unemployed). However, if he is above 18 years of age and employed, then you are not allowed to claim the tax benefits towards the premium paid on health insurance of such children.

# Meaning of Dependent Children in case of a female is that you can claim tax benefits on health insurance premium paid towards your female children up to her marriage and unemployed.

# You can’t claim the tax benefits if you paid the premium towards your in-law’s health insurance premium. However, your spouse can claim the tax benefits by paying the premium towards his/her parents (your in-laws).

# You have to claim the tax benefits towards the premium you paid but not towards the service tax or GST you paid.

# If you have purchased the life insurance policy with a Critical Illness rider, then Tax deductions on premiums paid towards such critical illness rider can be claimed under Sec.80D.

Download and Prepare At a time 50 employees Form 16 Part A&B for the Financial Year 2018-19 and Ass Year 2019-20 [ Who are not able to Download Form 16 Part B from the TRACES Portal,they can use this Excel Utility ] 

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