Tax Implications, Sub Limits, Bonuses...Health Insurance Jargon You Should Know

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Health insurance covers unforeseen medical expenses. It will include surgical, medications, consultations, in-home care and dental costs in times of emergency. You enjoy tax deductions too under Section 80D of the Income Tax Act. It makes healthcare affordable and easily accessible to all income categories.

The insurance will reimburse the insured or pay directly for the expenses incurred. But you must be well aware of the different terms associated with a health insurance policy. It will make it easy for you to make an informed decision for yourself and your family. Here's a look.

Tax Implications on Health Insurance

Premiums paid towards the upkeep of the policies are eligible for tax exemptions. Claims up to ₹25,000 per financial year is available on the health insurance premium. This is applicable for the entire family, that is, senior citizens, children, and spouses.

Tax benefits are also available for an annual preventive check-up. The claim can go up to ₹5,000 under the Income Tax Act of Section 80D. Further, premiums for elderly parents are also subjected to tax deductions of up to ₹30,000 per financial year. Policyholders can get an additional sum of ₹5,000 for health check-ups per year.

But know that you are not entitled to claim tax in the medical coverage for siblings. Medical insurance tax benefits will not be available for cash payments. You will have to pay a service tax of 15%. There would be no financial relaxation on the service charges. A group health insurance policy does not qualify for the tax benefits.

Entry and Exit Age

The age eligibility of the insured for taking the policy is known as the entry age. Anyone who is 18 and above can buy the product. It is allowed at least up to 65 years. This will mean the ‘completed age' as on the last birthday. Exit policies are usually around 75-80 in India. But ManipalCigna has no exit age in their ProHealth policy.

Sub Limits

Every health insurance comes with specific sub-limits. This means, under a particular plan, it will limit the maximum payable amount per medical treatment. It is necessary to understand exactly how much you will receive for different ailments. It will help you make a smart choice and arrange your finances accordingly.

ManipalCigna puts caps on diseases, surgeries, and procedures such as cataracts, hernia, piles, urinary stones, ligament tears, hysterectomy, joint replacements, cancer, and kidney damage. The payable claim (cashless or reimbursement) will be calculated against the disease-specific sub-limit. Further, the company reserves the right to apply a certain limit on a medical condition depending on the history and declarations on existing diseases.

Cumulative Bonuses

It is a benefit in health insurance offered by the insurer. This is applicable when you do not claim a cover in the current year. This is also known as the no-claim bonus. Companies like ManipalCigna will either offer an increase in the sum insured or a discount on the payable premium. You can also get a combination of both as a cumulative bonus. You will receive a 5% increase in the cover. Another 5% increase in the base of the sum insured is available in the claim-free third year. In short, you will have to pay lesser premium for the policy.

The range will not exceed 5-10%. The benefit can expire due to non-repayment of the premium. Switching to another health insurance provider will get the accrued bonus transferred too. But it will depend on different factors like bonus amount and age limit.

The main aim of a medical insurance plans is to secure your family. Try to buy it as early as possible to make the most of the benefits offered. It will help you stay protected in times of financial crisis. Check the sum insured, network hospitals and additional advantages and other clauses beforehand to avoid surprises later on.