Healthcare costs for hospitalisation in India have risen sharply in recent years. This has resulted in many families having experienced their financial planning going awry due to unexpected costs incurred on hospitalisation of a family member. The good news however, is that now there is a far greater awareness about medical insurance that helps you in choosing the right mediclaim policy. Moreover, the Income Tax Act provides benefits for expenses incurred — such as for insurance premium — in respect of medical expenditure incurred. But what if you have not taken health insurance and have actually incurred a good deal of expenses on the medical treatment for a member of your family? 

In such a situation, one can still claim deductions. Let us start by understanding the deductions one can avail of:

(a) Your employer can give you medical reimbursement of up to Rs 15,000 for medical treatment of you and your family members. In addition to the above deduction, up to Rs 15,000 in respect of mediclaim insurance premium paid in respect of parents, whether dependent or not, also can be claimed under Section 80D. The amount of deduction under Section 80D will go up to Rs 20,000 in case the person to be covered is of 65 years or more of age. The deduction in respect of mediclaim under Section 80D can be claimed for two categories of relatives separately. Thus, the aggregate deduction can go up to Rs 30,000 in case family members and parents are covered and will be higher if the person to be covered is a senior citizen.

(b) Section 80DD also allows deduction in respect of any money paid to Life Insurance Corporation or any other insurer or any specified company under a specified scheme for maintenance of such a dependent. The aggregate deduction in respect of treatment, maintenance as well for payment of money under the scheme approved cannot exceed Rs 50,000 in case of disability other than severe disability, and Rs 75,000 in case of the dependent having severe disability.

(c) In case you have incurred expenditure for medical treatment of a dependent person for a specified disease, a deduction up to Rs 40,000 is allowed under section 80DDB. This deduction rises to Rs 60,000 in case the person treated is a senior citizen. This section covers treatment of very critical diseases which are extremely expensive, such as neurological diseases, malignant cancer, full-blown AIDS, chronic renal failure and hematological disorders, etc. In order to claim this deduction, a certificate from a specialist doctor, as prescribed, has to be obtained and produced. People, particularly first-time buyers, are stuck with one basic question: which is the lowest cost mediclaim policy? Though cost is important, it should not be your only concern. You have to evaluate your policy on various other parameters as well and save yourself from making a wrong choice based purely on price. Say, if you have thyroid, wouldn’t you (all other things being the same) buy a mediclaim policy that may be a little more expensive but which will immediately cover the hospitalisation expenses arising from complications connected with this disease without considering them as complications arising from pre-existing disease? Or would you go in for a comparatively cheaper mediclaim policy which treats all such diseases as pre-existing and hence considers them not immediately coverable?[PAGE BREAK]

Well, pre-existing disease is probably the most important parameter, which is relevant because if a disease is treated as pre-existing then the policy normally provides no coverage or very restricted coverage for expenses incurred due to that disease for the first few years. Nobody knows when disease strikes. Hence, it is very important to keep provisions for such unforeseen expenses. So, get your family a mediclaim policy and be tension-free as also save on your tax bill all at the same time. There are two options available in the case of mediclaim policies: 1) A floater policy where the maximum sum assured allowed for all members of the policy in a year is Rs 10 lakh and 2) Individual policies where each member can take cover up to Rs 10 lakh in a year. Although the maximum cover that can be taken through an insurance company by an individual is Rs 10 lakh, you are allowed to take multiple policies with different insurance companies with a maximum cover of Rs 10 lakh per policy.