Section I: Income Tax and Your Career

• Ques: Medical insurance premium paid for entire family, including dependant parents, is deductible
• Ans: Key points:
  • Insurance premium up to Rs 15,000 (must be paid by cheque) during the financial year for the health of self, spouse or dependant parents or children is allowed as deduction from income.
  • Hence the taxable salary reduces up to maximum of Rs. 15,000 (up to Rs. 20,000 for senior citizen). Therefore, you get health bhi aur wealth bhi.
  • You must compare the premium from different insurance companies, along with the disease covered and the list of hospitals on the panel of the insurance company.
  • You must go for the cashless medical insurance. In cashless insurance, all the hospital bills are paid by the insurance company.
  • If you incurred the hospital expenses on your own and later received claim reimbursement from the insurance company, then the reimbursement receipt will not be taxable.
  • There is zero maturity value of a medical insurance policy - just like car insurance. It only helps to mitigate the medical expenses in case of a sudden health problem.
  • The premium paid by the employer for employee’s accidental cover is not taxable in the hands of the employee or the employer.