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- What is Section 80D of the Income Tax Act?
- Which payments fall under Section 80D tax deductions?
- Tax benefits and age of the insured
- Other sections under which you are eligible for tax deductions
- Additional points to keep in mind
- How to check your eligibility for tax deductions under section 80D?
- Key Takeaway
- FAQS - FREQUENTLY ASKED QUESTIONS
Medical emergencies can occur without warning, and one of the ways to protect yourself from the unknown is by opting for a Health Insurance plan . These plans are crucial tools in building a contingency fund and protecting yourself against the uncertainties of life. But their impact isn’t just limited to your healthcare needs. They also help you redirect your funds to focus on other financial goals. This special characteristic is possible due to tax exemptions.Understanding these tax exceptions will not only help you maximise the benefits offered under your current Health Insurance plan but will also help you save money for your other needs as well. This article will help you understand the tax deductions you can claim on your Health Insurance policy. Also Read: Important reasons to opt for online Health Insurance
What is Section 80D of the Income Tax Act?
As per Section 80D of the Income Tax Act 1961, you are allowed tax deductions on your premiums under Health Insurance plans in a year. These deductions apply to numerous plans and the additional premium you pay if you have chosen riders in your policy.
Which payments fall under Section 80D tax deductions?
Under the current laws, an individual or Hindu Undivided Family can claim a deduction under Section 80D for the payments mentioned below:
- Health Insurance premiums paid for self, spouse, dependent children, or parents (senior and non-senior citizens) in any form besides cash.
- Expenses incurred during preventive health check-ups.
- Medical costs incurred on senior citizens (aged 60 years or above) not covered under any existing Health Insurance plan.
- Any contribution to the Central Government health scheme or any such government schemes.
Also Read : Individual Health Insurance plans vs Family Health Insurance plans
Tax benefits and age of the insured
The most important aspect of tax deductions on Health Insurance plans is age. To be more specific, the accrued tax benefits of availing Health Insurance are assigned based on the ages of the insured parties.The maximum tax deduction under section 80D is ₹ 25,000 for individual policies and ₹ 50,000 for family policies. However, if you are a senior citizen (above 60), the maximum tax deduction allowed under section 80D is ₹ 50,000 for individual policies and ₹ 1 Lakh for family policies.Let’s break this down.
If no one is over the age of 60:
If you are a policyholder who pays premiums for yourself and your family, you can claim deductions up to ₹ 25,000 if you are all under 60 years old. However, if you pay Health Insurance premiums for your parents, who are also under 60 years, you can claim up to an additional ₹ 25,000 in tax deductions. The tax benefit could be up to ₹ 50,000 if all insured family members are below 60.
Either parent is over 60 years old:
If you are under 60 years but one of your insured parents is over 60, you can avail of a tax exemption of ₹ 50,000. Tax deductions can of up to ₹ 25,000 can also be claimed yearly for premiums you pay for a family health plan that covers you, your spouse, and your children.
The eldest member in the family is over 60 years old:
Suppose you have a family Health Insurance that covers you and your family members. However, you are over 60 years old. In this case, you can claim for tax deductions up to ₹50,000. In addition, the tax exemptions are capped at ₹50,000 for senior citizens (above 60 years old). So, you get a tax benefit of ₹1 Lakh in a financial year.
Preventive health check-up
Before we go any further, let's learn how to avail tax deductions for costs associated with preventive health check-ups.Preventive health check-ups are done as a preventive measure to identify any illness and mitigate risk factors early. The Government of India introduced tax deductions on certain preventive health check-ups for 2013 - 2014 to encourage individuals to be more proactive concerning their health.Under Section 80D, you can even claim tax deductions of ₹ 5,000 for payments made towards preventive health check-ups. However, this deduction will be within the overall limit of ₹ 25,000 or ₹ 50,000, based on the insured member's age.For instance, if you pay a Health Insurance premium of ₹ 20,000 and incur ₹ 5,000 for preventive health check-ups, you can get a tax exemption of ₹ 25,000. But if you pay a premium of ₹ 25,000 and another ₹ 5,000 for preventive health checks, you can only claim a maximum deduction of ₹ 25,000. For senior citizens over 80 years and not covered under any Health Insurance, medical expenses up to ₹ 30,000 are allowed for tax exemption. Here’s a table for quick reference:
| Insured Member(s) | Deduction Amount Under Section 80D (₹) | ||
|
| For you, spouse and dependent children | For parents | Total |
| All members under 60 years | 25,000 | 25,000 | 50,000 |
| Only parents over 60 years | 25,000 | 50,000 | 75,000 |
| All members over 60 years | 50,000 | 50,000 | 100,000 |
| Preventive care expenses | -- | -- | 5,000 |
*A deduction of ₹ 5,000 for preventive healthcare is part of the overall limit of ₹ 25,000/₹ 50,000.*A deduction of ₹ 5,000 for preventive healthcare is part of the overall limit of ₹ 25,000/₹ 50,000.
Other sections under which you are eligible for tax deductions
Besides tax deductions available under section 80D, taxpayers can also avail of benefits under sections 80DD and 80DDB.
Section 80DD
Under this Section, you get a tax exemption of up to ₹50,000 for bearing the medical expenses of a dependent handicap. In certain cases, the maximum tax deduction one can avail under the section is ₹1 lakh.
Section 80DDB
As per this section, you can claim tax deductions for expenses incurred on treating diseases such as cancer, AIDS, neurological disorders, Parkinson's disease, thalassemia, and chronic diseases. The upper cap deductible one can claim ₹40,000 for those below 60 years and ₹1 lakh for those above 60 years. Also Read: How to deal with a bad Health Insurance plan?
Additional points to keep in mind
- Note that the benefits of Section 80D are already an added component of ₹ 1.5 Lakh tax deduction that you can claim under Section 80C of the Income Tax Act.
- You can use the tax-saving funds to cover the future medical expenses of your parents.
- If you pay health premiums as a one-time investment, you can get tax benefits for years of insurance coverage.
- You can also claim tax deductions for premiums paid for yourself and family members, including your spouse, children, and parents. Health Insurance premiums paid for other relatives, such as brothers, sisters, grandparents, aunts, uncles, and so on, cannot be claimed as a tax deduction.
- Premium paid on behalf of working children is not considered a tax benefit.
- If you and your parents contribute together towards the premium, both parties can claim a deduction depending on the extent of the premium paid by each.
- Group Health Insurance premium provided by your employer is not eligible for deduction.
How to check your eligibility for tax deductions under section 80D?
You can visit the Income Tax official website to check how much tax deduction you are eligible to claim. From there, go to tax deductions under the Section 80D page. Fill in the required details on the page, such as medical insurance premiums for family and parents, payment made towards preventive health check-ups, and medical expenses incurred on a senior citizen. Filling in the details will automatically calculate how much tax deductions you can claim. You can find this figure amount under ‘Deduction Under Section 80D’. Also Read: How to file a claim in case of multiple Health Insurance policies?
Key Takeaway
- Under Section 80D of the Income Tax Act 1961, you are allowed tax deductions on Health Insurance premiums you pay for yourself and your family members.
- The deductions are mainly dependent on the ages of the insured members.
- You can avail tax benefits for costs associated with preventive health check-ups.
- Section 80DD and Section DDB offer additional tax benefits depending on the medical expenses you incur under your Health Insurance policy.
- You can visit the Income Tax official website to determine an exact figure on your tax benefits under Section 80D
FAQS - FREQUENTLY ASKED QUESTIONS
Can I claim deductions for multiple Health Insurance policies ?
Yes, you can claim deductions for premiums paid on multiple Health Insurance policies. However, the maximum deduction limit applies to the total amount paid for all policies combined. The limit mentioned earlier is for the aggregate of premiums paid.
Can I claim medical reimbursements and Health Insurance premium deductions ?
No, you cannot claim deductions under Section 80D for the same expenses if you receive medical reimbursements from your employer. However, you can claim deductions for Health Insurance premiums paid by you.
How should I claim deductions under Section 80D ?
To claim deductions under Section 80D, you must provide the necessary details in your income tax return (ITR) form. Maintain the relevant documentary proof of premium payments and health check-up expenses, such as premium receipts, bills, etc., as they may be required for verification if requested by the tax authorities.
Who is eligible to claim deductions under Section 80D ?
Any individual, Hindu Undivided Family (HUF), or taxpayer can claim deductions under Section 80D. It applies to resident individuals as well as non-resident individuals.
Can I claim tax deductions on premiums paid in cash for Health Insurance ?
No, you can only claim tax deductions on health insurance premiums if you pay through non-cash modes, such as cheques, demand drafts, online transfers, or digital payment methods. Cash payments are not eligible for tax benefits.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
