Health insurance is an insurance against the risk of incurring medical expenses among individuals. The insurer can develop a routine finance structure, such as the monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. According to the Health Insurance Association of America, health insurance is “coverage that provided for the payments of benefits as a result of sickness or injury. Includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment.”
For Philippine income tax purposes, premium payments on health and hospitalization insurance may be deducted from the gross compensation income or the gross business/professional income of a family of a resident citizen, non-resident citizen, and resident alien. Health and hospitalization payments are deductible only in the following conditions that must be encountered:
1. The insurance shall be taken by the individual taxpayer himself for his family;
2. The amount being claimed shall not exceed P2,400.00 a year or P200.00 a month per family;
3. The family has a gross income of P250,000.00 or less for the taxable year.
The total family income includes primary income and other income from sources received by all members of the family. For married taxpayers, only the wife or the husband entitled to claim for additional exemption for dependents is allowed this deduction.
Any other type of insurance tends to be out of the running for a deduction, even if it is not clearly related to getting sick includes life insurance policies; policies providing payment for loss of earnings (disability insurance); policies that pay for loss of limb or sight; policies that pay a guaranteed amount each week for a stated number of weeks if hospitalized for sickness or injury; the part of car insurance premiums that provides medical insurance coverage for all persons injured in or by the car, because the part of the premium for, the spouse and the dependents is not stated separately from the part of the premium for medical care for others.