MEDICLAIM – Life Relief + Tax Relief
Now-a-days people are so busy in their life that they forget the uncertainties with which they are surrounded; likewise they also forget to protect themselves from the outcome of such uncertainties. Let me illustrate you the definition of uncertainty, say Mr. Rao a small grocery shop owner whose family confines himself, his wife and his seven years old son. He somehow manages to make some savings but an extraordinary expense wipes out a good portion of his savings and in short his net savings is very low. Now one day on his way to shop a car hits him hard and he gets severely injured and was hospitalised. His wife got emotionally paralysed with the incident and the worry to arrange for finance to pay hospital bill further burdened her. She felt hopeless and depressed. Her savings does not allow her to fight with the sky rocketing medical cost as a result Mr. Rao was unable to get a good and satisfied treatment. This incident is uncertainty in my terms. If Mr. Rao would have insured him from such uncertainty, he would have got a great assistance. A one shot solution for such uncertainty is Health Insurance policy (Mediclaim Policy).
Hospitalisation for illness, disease or accident imposes heavy financial burden on individuals, families, employees. Mediclaim policy provides a health cover of a certain amount of money and hence in case of incurring any medical expenses, the expenses to a certain limit are borne by the insurance policy under which you are insured. There are plethora of companies offering such policy like National Insurance, Tata AIG, Bajaj Allianz, ICICI Lombard, Religare, Reliance, SBI and others. You may choose any of companies based on your requirements and compatibility. Basically it helps you to overcome emotional and financial crisis arising out of injury, surgery or any other condition.
The Mediclaim policy may be taken by an individual either on his own health or on the health of spouse, parents and dependent children. In case of HUF (Hindu Undivided Family) on the health of any member of the family. Any individual may be a resident or non resident, Indian Citizen or Foreign Citizen. Likewise an HUF may be a resident or non resident. Here Dependent Children means legitimate or legally adopted children. Children above 18 years, if employed, cannot be covered wherein a male children, if not employed but a bonafide student can be covered up to an age of 25 years and a female children if not employed can be covered until the time she is married.
Taking Mediclaim Policy brings with it lots of benefits and reliefs which are as under:
v Reimbursement of hospitalisation expenses which are reasonably and necessarily incurred viz., Room and Boarding Expenses, fees of surgeon, medical practitioner, consultants, expenses on blood , oxygen, medicines and drugs, X-ray, dialysis, Chemotherapy, pacemaker expenses, OT Charges, Cost of organs etc..
v Ambulance Charges for shifting the insured person from residence to hospital if admitted to ICU or emergency ward or from one hospital to another.
v Hospitalisation expenses of person donating an organ during the course of organ transplantation.
v Pre-existing disease is covered only after four continuous and claim free renewals with the insurance company.
v Cost of health check up and cumulative bonus when the policy is continuous renewed.
v Income tax benefits under section 80D of the Income Tax Act.
As per the age limit is concerned for taking Mediclaim policy, the minimum age is 18 years, children between the age of 3 months to 18 years can be covered provided parents are covered concurrently and suitable premium is paid. The maximum age for taking such policy have different ceiling depending upon insurance company’s own discretion. If you are running with a policy, a further inclusion of family member during currency of policy is prohibited except for a new born child between the age of 3 months to 6 months and newly married spouse within 60 days of marriage. Otherwise inclusion is allowed at the time of policy renewals.
The best part of Mediclaim policy is that besides providing financial security, the premium paid for availing such benefits is allowed as deduction from gross total income of the insured person subject to the provisions of the Income Tax Act. The provisions of the Act provides that the premium for Mediclaim policy can be made by any mode other than cash viz., Cheque, credit card or other online payment mechanism. The act prescribes the question of deduction available to an insured person. An individual paying premium for self, spouse or dependent children, the maximum deduction of Rs. 15000 is available and if any of the person specified above is a senior citizen and Mediclaim premium is paid for such senior citizen the deduction amount is enhanced to Rs.20000. Again a further deduction is available to an individual who has paid Mediclaim insurance premium on policy covering his/her parents to the maximum limit of Rs. 15000 and if any of the parents covered under the policy is a senior citizen, deduction amount is enhanced to Rs. 20000. An individual may take policy on his/her parents whether or not he is himself insured. In case of HUF, Mediclaim premium paid for any member of HUF, the maximum deduction is Rs. 15000 and if any of the members insured is senior citizen the deduction amount is enhanced to Rs. 20000.
(Senior citizen means an individual resident in India who is of the age of 65 years or more at any time during the relevant previous year. It is to be noted that the senior citizen should be a resident only, a non resident senior citizen will not get the enhanced benefit of maximum deduction of Rs.20000)
To illustrate the provision of the Income Tax Act, say Mr. Rao pays medical insurance premium of Rs.12000 to keep in force an insurance policy on his health and on the health of his wife and dependent children and Rs. 30000 (apply to case I & case II) to keep in force an insurance policy on the health of his parents.
Case I: Parents are not senior citizen -> Mr. Rao will be allowed deduction of Rs. 27000 (Rs. 12000+ Rs. 15000)
Case II: Parents are senior citizen -> Mr. Rao will be allowed deduction of Rs. 32000 (Rs. 12000+Rs. 20000)
Case III: Parents are senior citizen and the father paid Rs. 13000 out of Rs 30000 and Rs. 17000 being paid by Mr.Rao -> Mr. Rao will get deduction of Rs. 29000 (Rs.12000+Rs.17000) and the father will get deduction of Rs. 13000 as an individual.
Case IV: Parents are not senior citizen and the father paid Rs. 13000 out of Rs 30000 and Rs. 17000 being paid by Mr.Rao -> Mr. Rao will get deduction of Rs. 27000 (Rs.12000+Rs.15000) and the father gets deduction of Rs. 13000 as an individual.
In order to avail tax benefit Mediclaim premium should be paid under medical insurance scheme of general Insurance Corporation of India approved by central government on this behalf or any other insurer approved by the IRDA.
Claims against the Mediclaim policy are administered through Third Party Administrator (TPA) whose contact particulars appear on the policy documents. Insured can opt for cashless or reimbursement facility for their claim. The proposer has the option to avail TPA services which is cashless or direct service by policy issuing office which is on reimbursement basis.
The Mediclaim policy does not cover the followings injury/treatments:
xDental treatment except arising out of accident
xSexually transmitted disease & HIV (AIDS)
xPregnancy, Child Birth including caesarean
xIntentional Self- Injury, use of drugs, alcohol etc.
xCosmetic Surgery , Plastic surgery unless required to treat injury or illness
xNaturopathy treatment
xExperimental or unproven treatment
xExternal equipments such as contact lenses, cochlear implants etc.
The above exclusion is illustrative and not exhaustive.
So Overall Mediclaim policy is in no way should be avoidable. Again the most important step you should take care after taking such policy is to communicate the existence of such policy and the follow up procedure to use the policy to your spouse, parents and dependants.
In Mr. Rao’s example, if Mr.Rao would have insured himself under the Mediclaim policy, then Mrs. Rao would have got a great relief both mentally and financially.
--- RAHUL PODDAR
CAclubindia
