Benefits for people with special needs

Inflation and the rapidly rising costs of medical treatment have made life difficult for an average person. Imagine the woes of those who have a disabled person to support!

To mitigate the hardships faced by such persons and their parents/guradians, the Income-Tax Act offers benefits in the form of deduction from total income with reference to the disabled
person.

Insurance companies have also devised products for the benefit of parents/ guardians of disabled dependents. Unfortunately, many of us are not aware of these benefits. So, what are they?

You can claim tax benefit under Section 80 DD which allows deduction for money spent on maintenance of a disabled dependent or for providing for the dependent through payment of insurance premium.

You are allowed a deduction of Rs 50,000 for any expenditure incurred for medical treatment, training or rehabilitation of a dependent with disability. In case of severe disability, the Act allows for deduction of Rs 1 lakh.

Section 80DD also allows deduction of premium paid for a specified scheme or for insurance policy for the purpose of maintenance of a disabled dependent.

The aggregate deduction under Section 80DD is capped at Rs 50,000 in case of disability and Rs 1 lakh in case of severe disability.

For claiming deduction in respect of the above, you have to furnish a medical certificate from a government hospital certifying the disability of  the dependent and a self-declaration certifying the expenditure incurred on account of medical treatment (including nursing), training and rehabilitation of the disabled dependant.

You do not have to preserve the actual receipts for expenses incurred. However, you will have to produce the actual
receipts in case you claim payment to LIC, UTI, etc for the purpose of buying insurance or other schemes for maintenance of such dependent.

The Income-Tax Act also extends benefits to the disabled person himself. Section 80U of the Act allows a deduction of Rs 50,000 from income. This is enhanced to Rs1 lakh if the person suffers from severe disability. To claim this deduction, the disabled person needs to obtain a certificate from a specified medical authority and keep it up to date in case this certification needs to be renewed periodically.

Insurance companies have specialised schemes for those who have disabled dependents. But not many of us are aware of them. Health insurance cover provided by the National Trust needs special mention. The trust has introduced “Niramaya” scheme for persons with disabilities such as autism, cerebral palsy and mental retardation. The scheme covers health expenses up to a limit of Rs 1 lakh per year for a person suffering from these disabilities.

For premium, those who have family income of less than Rs 15,000 per month need to pay Rs 250 per year as premium, whereas those having family income more than Rs 15,000 per month are required to pay Rs 500 per year.

The scheme is provided free to below poverty line (BPL) families, provided the applicant holds a BPL card.

The scheme is administered by the National Trust in collaboration with ICICI Lombard. Under this scheme, even existing disease are covered without any medical check up. Moreover, this plan covers routine expenses like medical check-up, transportation and corrective surgery, etc, which are not covered under regular health insurance products.

Life Insurance Corp (LIC) also offers two insurance policies —Jeevan Aadhar and Jeevan Vishwas for benefits of
parents or guardian of person with physical disabilities which qualify for tax benefit under Section 80DD. These policies ensure that the dependent does not have to depend on anybody
for financial support in case something should happen to his parent or guardian. Jeevan Aadhar is a non-profit policy and relatively cheaper, whereas Jeevan Vishwas participates in profits.

Under both these polices, the life of the person on whom the disabled person is dependent is insured. In case the dependent dies before the guardian/ parent, the parent/ guardian will have the option to either keep the policy for a reduced paid-up sum assured or is entitled to receive refund of premiums paid.

However if the parent/ guardian dies before the dependent, 20% of the lumpsum assured becomes payable for the benefit of the dependent. Moreover, the balance is paid by way of monthly annuity for 15 years for sure and thereafter for life on the life of dependent.

The writer is CFO, ApnaPaisa.com, a price comparison engine for loans, insurance and investments. He can be reached at balwant.jain@apnapaisa.com