Is your employer paying for your health insurance or do you have your own cover? In either case, who reaps the tax benefits?
Healthcare has become more critical than ever, but it is also becoming increasingly expensive. In most cases, getting treatment for major illnesses is an expensive affair. That's why investing in health insurance is important – you have to pay a premium, so that your chosen insurance provider provides you with adequate coverage.
By now, we already know that medical emergencies can strike without notice – exactly how the COVID-19 pandemic changed our world, in no time. That’s why it is better to be safe than sorry.
In case you earn a salary every month, you can either opt for insurance through your employer, or get one on your own. If you decide to go with the first option – who gets the tax benefits? This is what we will find out in this blog.
Understanding different insurance scenarios
As mentioned above, you can either enjoy insurance through your employer or purchase health insurance on your own. The first one is offered as a part of the group health insurance policy, while in the second case, you can buy it on your own. When you do that, the insurance stays with you, even when you leave a company. Here's a tip that you must remember – even if you get insurance from your employer, you MUST purchase basic health insurance on your own.
Does the insurance coverage vary based on your position in a company?
The answer is yes. It depends on the position you are in, and if your employer chooses to offer different levels of health coverage to the employees. In most cases, junior employees are put together in one group health insurance plan. The seniors are put in another group, which offers higher coverage. Now here's what you need to know – the company may insist on paying the premium from their own account, since they may be able to claim the entire amount as a tax write-off.
In case you want more coverage, you can choose to pay from your own pocket! Yes, that option is available too. So, you can accordingly take a call.
What are the tax benefits one must know about?
There are several tax benefits that people can claim. For instance, one can get a deduction of up to Rs 25,000 from their taxable income, for the premium they pay towards their health insurance. In case you get your parents insured, you can again avail a deduction of Rs 25,000, but if they are senior citizens, this can go up to Rs 50,000.
Any tax benefits on health insurance offered by the employer?
In the case of the employer, the deduction can be availed by whoever pays the premium. For instance, if the employer is paying the entire amount, employees cannot enjoy any tax deduction on their health insurance policy.
But what if the employer and employee share costs on the premium? Both of them can avail a tax deduction on the premium they pay.
In the last scenario, where the employee is paying for the health insurance, but the policy has been introduced by the employer – a tax deduction can be availed. This will be taken into consideration in the employee's Form 16.
The last word
While this blog tells you everything about the tax benefits offered through health insurance, what's important to remember is that the policy you opt for does much more than this. It safeguards you from any medical emergency. Of course, the tax benefits work as an advantage, but treat health insurance as a necessity for your health needs.
After all, we already know anything can really throw your health off track! As they say, a stitch in time saves nine.