New Financial Year Brings Tax Saving Opportunities for Senior Citizens
Senior citizens can avail of higher tax savings this financial year (2018-19) for health-related expenses and health insurance premiums. This is a good opportunity to buy health insurance for senior citizens or get extra coverage if you already have insurance.
One of the best senior-friendly proposals in the new Union Budget for 2018-19, which has just come into effect, is the increase in deduction limit under Section 80D of the Income Tax Act, under which one can claim benefits for payment of health insurance premiums. For 60-plus senior citizens, this deduction limit has been raised from Rs. 30,000 in the previous tax year (2017-18) to Rs. 50,000 for 2018-19. For those in the highest tax bracket, the tax savings could be up to Rs. 15,600 compared to Rs. 9,270 in the previous year. This is a good opportunity to buy health insurance for senior citizens or get extra coverage if you already have insurance.
Also, in the previous financial year, only very senior citizens (those who are 80-plus) could claim deductions for medical expenses in the absence of a health insurance policy. However, from this year, the benefit has been extended to cover all senior citizens. This means that senior citizens can now claim a deduction of Rs 50,000 towards medical expenditure if they don’t have a health insurance policy.
Children of senior citizens who pay premiums on their parents’ behalf can now, in addition to the deductions they claim for themselves and their family, get further deductions for policies bought for their parents.
Health insurance experts recommend therefore that senior citizens take advantage of this new ruling to buy themselves a basic health insurance policy or, if they have one already, to increase coverage by using top-up plans and floaters.
However, it is important to remember that a health insurance policy doesn’t pay for everything. It does not pay for incidentals and outpatient expenses although all policies usually cover critical illnesses. Read the fine print carefully or have a knowledgeable person in the family read it for you. The most important thing still is to build an emergency fund corpus to take care of medical expenses not covered by insurance.