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HEALTH INSURANCE

Got a preventive health check-up? Don't forget to claim tax deduction

Janhavi Shinde Janhavi Shinde 03 February 2017

As the age old wisdom goes, prevention is better than cure. Preventive health check is one way to ensure that you don’t end up spending lacs for an illness. It could have been diagnosed earlier and would have cost you only some thousands.

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In this post, let us discuss the utility of getting a preventive health check-up done and the lesser known tax benefits that accompany it.

Preventive Health Check-up: Is it Really Needed?

When it comes to our cars or for that matter, a water purifier, it generally gets serviced at least once every year. However, when it comes to our physical health, we don’t bother to get a check-up done ever.

Imagine this situation! One day, you suffer chest pain and visit the doctor, who in turn asks you to get some medical tests done and concludes that if you had come a little earlier, it would have been better. Scary, isn’t it?

When it comes to insurance, definitely sufficient mediclaim and critical illness insurance can mitigate the financial hardship to some extent. However, note that it cannot compensate the permanent loss of good health due to the time lag between identification and commencement of treatment for disease. And so the question arises: Is there a way to avoid such an unpleasant medical shock?

The answer to this question is a regular system of “preventive health check-up”. So, when I say regular check-up, it should not be a one-time affair but should be done consistently, for example, on an annual basis. Also, fixing a date for the check-up can really help in setting up reminders and inculcates discipline.

For example, you have a preventive check-up to be done on an annual basis on Jan 15 every year. So, once you fix upon a date, it is easy to set up reminders and ensure that you’re able to meet this commitment towards your health.

Tax Deduction On Preventive Health Check-up Expense

Amongst the well-known and publicized tax deductions like life and health insurance, PPF, NSC etc., there is one tiny deduction which is missed out and that is for preventive health check-up. This deduction was introduced from the assessment year 2013-14.

Following Are The Conditions For Claiming This Tax Deduction:

  • You need to incur an expenditure on preventive health check up in a particular financial year.
    The preventive check-up (to qualify for the tax deduction) can be for self, spouse, parents and dependent children only (Note: There is no limit prescribed on the number of children. Also, there is no deduction available on payment for in-laws, siblings and children who are not financially dependent on you)

  • Expenses can be in cash or in a mode other than cash.
    If all the above conditions are satisfied, the amount that’ll qualify for deduction is the amount spent in the financial year or Rs. 5,000 whichever is less. This limit of Rs. 5,000 is subsumed within the overall limit of Rs. 25,000 for mediclaim insurance premium. Unlike mediclaim insurance premium, there is no additional deduction in case a senior/super senior citizen undergoes the check-up.

To Assist You In Understanding How It Works, Let Us Look At The Following Scenarios:

Scenario 1

Mediclaim insurance premium paid: Rs. 15,000; Preventive heath check-up expense: Rs. 10,000 Tax deduction under Section 80D: Rs. 15,000 + Rs. 5,000 = Rs. 20,000

Scenario 2

Mediclaim insurance premium paid: Rs. 20,000; Preventive heath check-up expense: Rs. 7,000 Tax deduction under Section 80D: Rs. 20,000 + Rs. 5,000 = Rs. 25,000

Scenario 3

Mediclaim insurance premium paid: Rs. 24,000; Preventive heath check-up expense: Rs. 2,000 Tax deduction under Section 80D: Rs. 24,000 + Rs. 1,000 = Rs. 25,000

Scenario 4

Mediclaim insurance premium paid: Rs. NIL; Preventive health check-up expense: Rs. 10,000 Tax deduction under Section 80D: Rs. NIL + Rs. 5,000 = Rs. 5,000

So, as we can see from above, this deduction does not raise the overall limit of tax deduction above Rs. 25,000. Also, it can be claimed irrespective of whether you have a mediclaim insurance policy or not.

Having said that, the utility of this tax deduction is especially in case of nuclear families. Due to a small family size, the mediclaim insurance premium is not high enough to claim the full benefits of Section 80D deduction of Rs. 25,000. And this is where tax deduction towards preventive health check-up is well utilized and fills the necessary gap, and at the same time reducing the tax liability.

Some Other Points To Note

The law is silent on things such as the kind of tests that are eligible, any particular type of laboratories which qualify etc. Due to this, any expense towards preventive check-up, as understood in general parlance should safely qualify for a deduction.

There is no requirement of submitting any document/receipt to the income tax department. However, as a matter of record and proof at a later date, it is advisable to retain the receipt of the payment in your tax file.

This deduction can be claimed on individual basis. The wife may be a working individual. But, the insurance premium meets Section 80D limit of Rs. 25,000 in husband’s tax return. In such a case, the wife can claim for preventive health check-up expense in her return so as to use the Section 80D limit thus, reducing her tax liability.

Conclusion

It is common knowledge that with the rise in lifestyle disorders, onset of diseases like diabetes and heart disease is very quick and is no longer an old man’s illness. In such a situation, apart from having adequate life insurance, a pro-active effort in getting a preventive health check-up can go a long way in avoiding unwanted shocks in your life’s journey. Getting a cool tax break on this expense serves as an icing on the cake. It is a good move by the government to promote people’s physical and emotional well-being.

How to Claim Tax Benefit for Preventive Health Check-up?

  • Tax deductions are applicable on health insurance and family floater plans.
  • Policyholders are eligible for tax deductions on annual premium payments, offered by employers as well as standalone health plans.
  • Health insurance can be purchased for self, spouse, dependent children and/or dependent parents. Dependent children imply children who are unemployed. Unemployed male children can be covered up to a maximum of 25 years, while an unemployed female child can be covered till she is unmarried.
  • Policyholders are eligible for tax deductions on annual premiums for health plans for dependent parents.
  • Premiums paid towards health insurance for siblings do not attract tax deductions.
  • Offers the flexibility to make premium payments offline, except cash, as well as online. The available online modes of payments are Debit Card, Credit Card and Net Banking.

Important Things to Know Regarding Tax Deduction under Health Insurance

  • Medical insurance policies enable policyholders to avail a tax deduction of a maximum of Rs. 5,000 under Section 80D of the Income Tax Act, 1961, for the expenses incurred towards preventive health check-ups for self, spouse, children or parents. The tax deduction is applicable on the annual premium paid towards the medical insurance policy.
  • Annual premiums paid towards preventive health check-up who are senior citizens, i.e., of 60 years and above can avail tax deductions of up to Rs. 7,000 under Section 80D of the Income Tax Act, 1961.

Why Preventive Health Check-up Is Important?

The importance of preventive health check-ups change with age. Knowing about a disease at the earliest can help get proper treatment and nipping it in the bud. The following preventive health check-up should be conducted depending on your age:

For individuals in their 20s and 30s:

  • Blood pressure
  • BMI
  • Checking cholesterol and glucose levels
  • Breast self-checks for women
  • Testes self-checks for men
  • Check-up for skin cancer
  • Dental check and cleaning

For sexually active individuals:

  • Pap smear every two years (women)
  • Sexually Transmitted Infections (STI) screenings

For individuals in their 40s:

All the health check-ups of the 20s and 30s and a few more, as specified below:

  • Mammogram for women
  • Check-up for Type 2 Diabetes
  • Check-up for cardiovascular diseases
  • Eye check-ups for glaucoma

In your 50s and 60s:

All the health check-ups of the 20s, 30s and 40s and a few more, as specified below:

  • Check-up for osteoporosis
  • Visual and hearing impairment check-ups

Reviews On Preventive Health Check-ups

“I am very conscious about my health and make sure that I go for health check-ups frequently. Fortunately, this habit helped me diagnose skin cancer in early stages and take the necessary precautions immediately.” – Himani Shah

“I have a family history of blood pressure and cholesterol. I have always been made aware by my family that not being conscious about my diet and regular check-ups, these diseases will get aggravated at a young age. There is no other way out for me to maintain good health than going for preventive health check-ups every few months.” – Anil Thakur

“My preventive health check-up plan has benefitted my entire family – my wife, children and dependent parents and myself too. I make sure that I take my family for regular check-ups. Medical expenses are already costly and will become even more expensive gradually. My health insurance has been financially beneficial for me. I’m glad that I decided to go for it.” - Neil D’Souza

Recommended Read: Tax deduction on health insurance

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.
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