March 31 deadline: How health insurance can optimise your income tax outgo

As the financial year nears its close, individuals typically rush to lock in last-minute tax-saving investments. Among the available options, health insurance stands out, not just for its tax benefits, but also for its role in safeguarding long-term financial stability.

Under Section 80D of the Income Tax Act, 1961, individuals opting for the old tax regime can claim deductions on health insurance premiums, up to ₹25,000 for self and family, and up to ₹50,000 for senior citizen parents.

Expenses of up to ₹5,000 on preventive health check-ups are also eligible within the overall limit.

While these provisions make health insurance a practical tax-saving tool, insurers say the year-end exercise should not be limited to reducing taxable income.

Chief Financial Officer of Manipal Cigna Health Insurance, said the tax-saving window can also serve as an opportunity to reassess whether existing coverage remains adequate.

He noted that individuals should evaluate their sum insured in light of rising healthcare costs and consider more comprehensive options such as family floater plans, critical illness riders, and outpatient care benefits.

He added that health insurance should be viewed as a long-term financial safeguard rather than a short-term tax-saving instrument, with policyholders assessing coverage gaps and factoring in medical inflation.

Chief Operating Officer at SBI General Insurance, said Section 80D often acts as a trigger for individuals to review their financial plans toward the end of the year. He said individuals should assess whether their current sum insured is sufficient, given rising medical costs, and consider enhancing coverage where necessary.

A base cover of around ₹10 lakh is generally recommended, he said, with higher coverage depending on factors such as city of residence, medical history, and preferred hospitals.

He also pointed to recent GST relief on health insurance premiums, which could make higher coverage more affordable.

Experts add that beyond premiums and tax benefits, individuals should evaluate policy features such as coverage scope, add-ons, insurer service levels, and network hospitals. Options like family floater plans can help expand protection more efficiently.

Source from: https://www.cnbctv18.com/personal-finance/march-31-deadline-how-health-insurance-can-optimise-income-tax-outgo-ws-l-19872271.htm