TAX Deductions under Health Insurance
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Save Taxes under Health Insurance Policy in India

Having a Health Insurance Plan not only helps you stay protected from unannounced medical emergencies but also helps you to save on taxes. Yes, you heard it right. You can now save your taxes simply by having a Health Insurance policy. To explore more about Health Insurance Tax Benefits, continue reading

Section 80D of Income Tax Act

In order to encourage the citizens of India to have a Medical Insurance policy, the Income Tax Department allows an individual to avail the Tax Deduction towards premium payment of health insurance policies for self and family under Section 80D of the Income Tax Act.

This deduction can be availed regardless of the fact whether your parents or your children are dependent on you or not. Under this act, one can claim an additional tax-saving benefit of upto Rs. 50,000 if they pay the premium for health coverage availed by any of their parents.

What are the Types of Deductions on Medical Insurance Premium under Section 80D of ITA?

  • Health insurance premium paid for self and family : One can avail tax benefits of upto Rs. 25,000 if he/she has brought a Health Insurance policy for themselves or their immediate family.
  • Health insurance premium paid for parents: One is eligible for a deduction of up to Rs. 50,000 per year if any of their parents is 60 years or above in age. Tax Benefit under medical insurance for parents can be availed with any specific senior citizen health insurance policies that are specifically made for them.
  • Preventive Health Check-Up Expenses: With the maximum limit of Rs. 25,000 for below 60 years of age and Rs. 30,000 for senior citizens, one can avail the benefit of Rs 5000 for Preventive Health Check Ups.
  • No Tax Benefit on Cash Payment : In order to avail Tax Benefit under section 80D, one needs to pay the premium only through certain banking modes, such as a demand draft, cheque, debit or debit cards, or net banking.

Let us understand How Tax Deductions work with the help of an example:

Suppose, you have a family of five members, you (38 years), your wife (35 years), one kid (8 years), your father (68 years) & your mother (60 years). You & your family are covered under a family floater Health Insurance, where you pay the annual premium of Rs. 30,000. Above this, you pay 18,000 annually for preventive health check-ups. Thus, the final amount paid by you would be equal to Rs. 48,000.

Hence, in this case you are eligible for the Health Insurance Tax Benefit under 80D of up to Rs. 35,000 (Rs.30,000 + Rs. 5,000) annually.

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Section 80DDB

Individuals who spend on medical treatments of specified illnesses or diseases are eligible to claim Tax Deduction under Section 80DDB.

Who are Eligible to Avail Income Tax Deductions on Medical Insurance Premium under Section 80D of ITA

  • Insured
  • Their Spouse
  • Their Kids, &
  • Their Parents
  • HUF (Hindu Undivided Family)

Health Insurance Companies

Deductions under Medical Insurance Premium under Section 80DDB of ITA?

Under Section 80DDB, your Health Insurance Policy provides Tax Deductions up to Rs. 40,000. In case the Insured is diagnosed with a Critical Illness, there is a provision of Tax Deduction upto Rs. 80,000. To avail Deduction under Section 80DBB, it is mandatory for the policyholder to attach a certificate issued by the doctor while filing an Income Tax return.

Tax Saving under Section 80DD

Under Section 80DD, you will be able to avail a Deduction up to Rs. 75,000 if you are taking care of the treatment expenses of a dependent with disability. One can claim the Tax Deduction against the expenses incurred on the medical treatment, training rehabilitation, nursing, and maintenance of the dependent with disability.

A caretaker can avail a Tax Deduction up to Rs. 1.25 lakh for severe disability.

Save Taxes Through Section 80U

Those policyholders who are suffering from any sort of physical or mental disability are eligible for a Tax Deduction of Rs. 75,000 under Section 80U. People can avail Health Insurance Tax Benefits under section 80U who are suffering from at least 40% disability.

What are the Limits for Claiming Tax Benefits?

The quantum of Tax Benefits depends on the age of the Insured. Read the following points to understand the limitations of Health Insurance Income Tax Deductions:

  • One can avail Tax deductions of Rs. 25,000 on the premiums paid for self, spouse & kids, provided the age of individual is less than 60 years of age.
  • If the individual has taken a policy for their parents who are 60 years old or above, then the maximum tax deduction would be capped at Rs. 50,000. One can only avail Tax Benefit under medical insurance for parents with any specific senior citizen health insurance policy.
  • For those who are above 60 years old and are paying health insurance premiums for their parents, the tax benefit would be Rs. 1,00,000

Conclusion

Health Insurance is a must in your investment portfolio if you are looking forward to planning your finances. The government encourages everyone to buy Medical Insurance and allows them to avail Tax Deductions on it under different Sections. Having health Insurance is a must in your investment portfolio if you are looking forward to planning your finances. The government encourages everyone to avail Health Insurance Tax Benefits under different above mentioned Sections.

How to Save Taxes Under Health Insurance Policy: FAQ

1. How much tax can I save with health insurance?

Under Section 80DDB, your Health Insurance Policy provides Tax Deductions up to Rs. 40,000. In case the Insured is diagnosed with a Critical Illness, there is a provision for a Tax Deduction of up to Rs. 80,000. To avail of Deduction under Section 80DBB, it is mandatory for the policyholder to attach a certificate issued by the doctor while filing an Income Tax return.

2. Health Insurance comes under 80C or 80D?

Premium paid on health insurance and expense incurred towards preventive health checkups can be claimed as a deduction under Section 80D.

3. Are 80C and 80D the same?

section 80C has a cap of only Rs. 1.5 lakh for deductions. Meanwhile, section 80D provides a deduction on insurance policies up to a certain limit.

4. Can we claim 80D and 80DD together?

No, both these deductions cannot be claimed simultaneously.

5. What is covered under 80D?

Under Section 80D, you can avail of income tax saving benefits against healthcare-related expenses and payment of medical insurance premiums for self, your spouse, children, and senior citizen parents.

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Naval Goel is the CEO & founder of PolicyX.com. Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.