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Health Insurance Tax Deduction Under Section 80D

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  • Premium Discount on Multi Year Policy
  • Secure Your Health and Save Tax up to 1,00,000
  • ^^Get Additional Tax Benefits on Preventive Health Check up
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    Deduction Under Section 80D for Health Insurance Premium

    Do you know that you can get dual protection for your savings with a comprehensive health insurance plan? Here is how – firstly, it covers the medical expenses you incur in a year, saving you from the financial stress when coping with an illness or injury. Secondly, you get a chance to save tax! The premium you pay towards a mediclaim or health insurance policy qualifies for tax deduction under Section 80D of the Income Tax Act 1961. That is, it reduces your tax liability. Therefore, health insurance is a vital investment to grow your savings and ensure your financial stability.

    Let us understand section 80D benefits and how you can enjoy tax benefits with health insurance plans.

    What is Section 80D of the Income Tax Act of India?

    Section 80D is a provision under the Income Tax Act of India that allows a person, an individual, or HUF (Hindu Undivided Family), to claim income tax deductions from the taxable income to pay the health insurance premium. The premium paid for a health insurance policy for self, dependent parents, spouse, and children is exempt from tax. Under this section, health insurance premium, contributions to the Central Government Health Scheme, and preventive health check-ups qualify for a tax deduction under section 80d.

    However, the amount of medical insurance tax benefits for individual and family health insurance depends on the insured's age and income. Opt for health insurance as it enables you to save money considerably under section 80D.

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    How does Section 80d Work in Medical Insurance?

    The deduction under Section 80D of the Income Tax Act may vary according to the nature of your policy. Below is the table that helps you to understand it better:

    Persons Covered Exemption Limit Total
    Self and family Rs 25,000 Rs 25,000
    Self and family + parents Rs 25,000 + Rs 25,000 Rs 50,000
    Self and family + senior citizen parents Rs 25,000 + Rs 50,000 Rs 75,000
    Self (senior citizen) and family + senior citizen parents Rs 50,000 + Rs 50,000 Rs 1,00,000

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    Save Tax On Health Insurance

    How to Avail Medical Insurance Tax Benefit?

    Read here how you can avail of medical insurance tax benefits against under health insurance policy:

    Tax Deduction on Health Insurance Premium

    Health insurance premium refers to the sum of money you have to pay to the insurance company to get the coverage under a mediclaim policy. Section 80D of the Income Tax Act allows you to get a tax deduction of up to Rs 25,000 per year for any individual and family health insurance policy covering self, spouse, and children. Senior citizens can get a deduction up to a maximum of Rs 50,000 per year.

    Example:  

    Rohit (aged 40 years) opted for a health insurance plan covering self, wife (36 years), and 8-year old child. He pays an annual premium of Rs 25,850. He also pays a health insurance premium of Rs 45,000 for the mediclaim policy covering his elderly father (67 years) and mother (62 years). 

    • The deduction Rohit is eligible for the health insurance policy covering self, spouse, and child is up to Rs 25,000.
    • The maximum deduction he is eligible to get for the mediclaim for parents is up to Rs 75,000.

    In this way, he becomes eligible for the total deduction under Section 80D up to Rs.70,000 for a year.

    Tax Benefit on Preventive Health Check-Up

    Preventive health check-up expenses up to Rs. 5,000 are eligible for Section 80D tax exemption. For instance, Ram has paid Rs. 23,000 as the premium for his mediclaim and also spent Rs. 5,000 for his health check-ups. As per the policy, he is eligible for tax exemptions of Rs. 23,000 for the premium paid and Rs.2,000 for a health check-up; the total is Rs. 25,000. It is so because, under section 80D of the Income Tax Act, the maximum claim cannot exceed Rs. 25,000.

    How to File Tax Return?

    Filing a tax return will not be a daunting task if you follow simple steps that can ease the process:

    • Visit the official portal of the Income Tax Department.
    • Go to the e-file section and click on ‘Income Tax Return'.
    • Select the assessment year and the correct ITR form.
    • Choose 'Original/Revised Return' under ‘Filing Type’ and 'Prepare and Submit Online' under ‘Submission Mode.'
    • Verify the pre-filled data and bank details. Click ‘Continue.' 
    • Upload Digital Signature Certificate (DSC). Click ‘Submit.'

    A sound health insurance policy provides you and your family a comprehensive medical coverage and supports you in your tough time. It bears your medical expenses and helps you access the best possible treatment. Its benefits are not limited to this; along with the proper treatment and financial security, it entitles you to get a mediclaim deduction under 80D of the Income Tax Act. That is why investing in the right health insurance offers you a double bonanza.

    Things to be noted before Filing Tax Return

    • It is necessary to pay the health insurance premium through net banking, credit card /debit card, online mode, or another payment gateway for getting the tax benefits. 
    • Any cash payment will not qualify for a tax deduction under Section 80D.  
    • Premium paid for siblings, grandparents, paternal and maternal relatives does not qualify for a tax deduction. 
    • The premium that parents pay on behalf of working children cannot be considered for tax benefit.
    • The Group Health Insurance premium paid by the company on behalf of the employees covered under the group is not eligible for deduction.
    • One should file the ITR before the specified deadline, depending on the category.

    Read about Income Tax Slabs and Deductions Income Tax Slabs for Women | Income Tax for Senior Citizens

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    How to Maximize Health Insurance Tax Benefits for Family?

    The following steps can help maximize medical insurance tax benefits for your family:

    • If an individual and spouse both are earning members, they can opt for a health insurance plan and split the premium amount by paying individually. The individuals will be issued tax certificates, and they can claim a tax deduction under Section 80D on the health insurance premium, up to the specified limit.  This way, they can lower the tax liability and get the deductions up to the maximum prescribed limit. 
    • One can include parents in a family floater plan to get comprehensive protection for the family and get a total tax deduction up to Rs 50,000, provided the individual and parents are below 60 years.
    • The ideal way to save maximum tax is to opt for a health insurance plan covering senior citizen parents. Thus, one is entitled to an additional deduction of up to Rs 50,000. So, the total deduction is up to Rs 75,000. 
    • If the proposer and insured covered in a health insurance policy are above 60 years of age, in that case, the maximum deduction under Section 80D limit is up to Rs 1,00,000.

    Example:

    The health insurance policy covers employees, including their spouses and children. The existing health insurance policy has a sum insured up to Rs 10 lakh.

    Maximum tax deduction limit: Rs 25,000

    The health insurance premium paid: Rs 15,280

    The unutilized Section 80D Limit: Rs.9720 

    To maximize Section 80D benefits, the person can go for a cashless *OPD offering of Rs 15,000 at a premium of Rs 11,000 (with GST), thus saving Rs 4000. Besides getting the cashless facility and enhanced coverage, the person also saves Rs 2,916 as medical insurance tax exemption.

    Tax Benefit on Single-Premium Mediclaim Policy

    Suppose a person opts for a mediclaim policy with a validity of more than one year and pays the premium as a lump sum amount. In that case, the mediclaim deduction is calculated by dividing the total premium amount paid by the number of policy years. You are eligible to save tax up to Rs 1,00,000 depending upon the number of insured members and their ages.

    ^^Apart from the tax exemption on the health insurance premium, you are also eligible for an additional deduction under Section 80D up to Rs 5,000 on preventive health check-up expenses incurred for your family members.

    Bottom Line!!

    When you have financial responsibilities towards your family, opting for health insurance serves the dual purpose of securing your finances against rising medical bills and reducing the tax burden. The income tax act has various provisions that make you eligible for tax benefits under the different sections, including deduction under Section 80D. Opt for Care- a comprehensive health insurance policy offered by Care Health Insurance gives you maximum coverage and health insurance tax benefits.

    FAQs on Tax Deduction Health Insurance

    Q. How to claim deduction under section 80D?

    Tax deduction is availed on individual health insurance or family plans. Premium paid towards health insurance taken for self, spouse, children and parents are allowed for deduction. To claim the deduction, ensure all medical expenses are paid in valid payment modes like net banking and digital platforms except cash.

    Q. Who can claim an 80D deduction?

    Every individual and HUF can claim an 80D deduction.

    Q. Which document is needed for preventive health check-up 80D tax deduction?

    The income tax department doesn’t ask for any document/receipt to claim the deduction. However, for a record and proof, it is recommended to keep the receipt of the payment with a policy document mentioning the name of policyholder.

    Q. How much tax exemption can I avail under section 80D?

    An individual who pays the premium towards a health insurance policy is eligible to get maximum medical insurance tax exemption up to Rs 1,00,000 per year if the proposer and the insured are above 60 years of age.

    Q. I made cash payments for my health insurance policy, can I still avail tax exemptions?

    No. Policyholders are not eligible to get a tax deduction under Section 80D if they have made a cash payment for the health insurance premium. To avail of the medical insurance tax benefit, it is necessary to opt for a payment mode other than cash, such as net banking or credit/debit card.

    Q. My children aren’t dependent on me can I claim tax exemptions for their health insurance under section 80D?

    Parents cannot get section 80D benefit if the health insurance premium is paid on behalf of working children.

    Q. Can I get medical insurance tax benefits for more than one health insurance policy?

    One can get a tax deduction on the premium paid for more than one health insurance policy, subject to the maximum tax deduction limit, as applicable.

     

    ^^Note: Tax deduction on health insurance premium is subject to rules and regulations of the Income Tax Act. Please refer to them before filing the return.

    *As per underwriter discretion

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