Deciphering the raised Medical Insurance Limit

While India expected an increase in exemption limit, under Section 80C, they got higher tax deductions under Section 80D instead. The Union Budget has increased the allowable deduction under the section to Rs. 25,000 for individuals and Rs. 30,000 for senior citizens. The limit was earlier set at Rs. 15,000 for individuals and Rs. 20,000 for senior citizens. The exemption under Section 80D allows an individual to claim a deduction for the premium paid on health insurance of self, spouse, children or parents.
 
Who will get the benefit?
 
Therefore, question is if an individual would be able to derive the maximum benefit from the elevated deduction limit. The answer is that it will not translate into much for those aged below 35 years. However, senior citizens will be a category of Indians that would get maximum benefit from such increased deduction limit.
 
Health insurance premium is dependent on the age and health status of an insured and scales up as age grows. Hence, senior citizens who have to pay more on medical insurance premium and require special covers will find some relief from the higher deduction limit. Moreover, the higher deduction limit aims to balance the rising medical cost these days.
 
Choose wisely
 
But, those who are below the age of 35-40 years might not get many benefits. For example, an individual taking a medical cover of Rs. 10 might have to pay just Rs. 7,000-8,000 in premium, which is quite below the deduction limit. It is advisable that one could choose out-patient department (OPD) or day-care procedures in the coverage to take the maximum benefit of the deduction limit. Also, family floater policies will help an individual claim most of the exemption under the Section.
 
But, to summarize, the endeavor to claim higher exemption limit will increase premium burden on an individual in one way or the other. Hence, one should refrain from choosing unwanted covers and top-ups just for the sake of utilizing the higher exemption limit.