Thursday, March 29, 2012

Finally Some Good News - Budget 2012 and Impact on our Healthcare & Medical Expenses

Of late, there have been multiple articles in our blog that have carried loads of BAD News for us. "The Hike in Service Tax & Excise Duty", "The Scrapping of Sec 80CCF", "Changes to Wealth Tax Laws" etc. Finally, there is something minor that may some as good news for us.

Yes, you read me right. "Finally Some Good News". This News pertains to the changes to how we handle our medical and healthcare related expenses and claim tax deductions. Shall we see what they are?

Good News No. 1: Preventive Medical Checkups

The first good news is that, the law allows us to spend up to Rs. 5,000/- on preventive medical checks. This could be blood tests, cardio health checks etc.

However, a point to note here is that, this Rs. 5000/- is within the Sec 80D limit of Rs. 15,000/- Sec 80D is the section that covers premium paid on Medical Insurance.

How is this Useful?

1. If your medical insurance premium is less than Rs. 15,000/- you can get your health checked and utilize this amount to cover for the shortfall in the upper limit of Rs. 15,000/-
2. People are given a chance to invest on their own health and take up preventive healthcare checkups.

All you have to do is, undergo a preventive health check in a reputed hospital and submit the bill to your employer to utilize this feature.

Good News No. 2: Inclusion of Health Insurance Premiums paid for Parents

The second good news again deals with Sec 80D. This rule states that, an individual if paying the health insurance premium for his/her parents can claim up to Rs. 15,000/- as relief. Furthermore, if the parents are senior citizen the amount is Rs. 20,000/- (Senior Citizen is anyone who is above 60 years old)

How is this Useful?

Earlier Sec 80D covered only Self, Spouse and Children. Now, parents are included in the list too. So, we can claim an extra Rs. 15,000/- (or Rs. 20,000/- depending on our parents age) under this section for tax relief. This makes the total exemption under this section Rs. 30,000/- and Rs. 35,000/- respectively.

Good News No. 3: Medical Treatment on Dependents with Disabilities

Under Section 80DDB, any expenditure done on medical treatment of a disabled dependent is eligible for tax rebates. The limit is Rs. 40,000/- for normal dependents and Rs. 60,000/- for Senior Citizens. The Finance Minister has lowered the threshold of who qualifies as a senior citizen. Up until this year, the dependent had to be 65 years of age to qualify for this Rs. 60,000/- limit. From next assessment year, anyone above 60 years of age will qualify for this.

How is this Useful?

Individuals who have disabled dependents in the age group between 60 to 65 years will benefit from this ruling which allows tax exemption on an extra Rs. 20,000/- per year.

Overall Summary of the Good News:

1. Additional Rs. 5,000/- (Part of Sec 80D limit of Rs. 15,000) allowed on preventive health checks
2. Additional Rs. 15,000/- allowed as medical insurance premium for parents (Amount is Rs. 20,000/- if parents are senior citizens)
3. Age limit for Sec 80DDB lowered to 60 years to enable tax exemption for up to Rs. 60,000/- on the medical treatment of disabled dependents

Let us hope and pray that no one from our family falls sick or requires medical treatment. But, lets at least utilize the limits available on medical insurance premiums and get ourselves adequately insured just in case the unfortunate event of us anyone falling sick happens.

Happy Insuring yourselves!!!

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