Health Insurance Tax Benefits Under Section 80D

Besides protecting you against unexpected healthcare costs, a health insurance policy is a very efficient tax-saving tool. As a health insurance policyholder, you can take advantage of many tax benefits under Section 80D of the Income Tax Act, 1961.

The premium paid can be claimed as a tax deduction of mediclaim under the Income Tax Act, helping you avail health insurance tax benefits. Moreover, the premiums paid towards the health insurance of your family, including your spouse, children and parents are also eligible for tax exemption under Section 80D of the Income Tax Act.

Therefore, buying a health insurance policy will not only help you reduce healthcare costs but also help reduce your taxable income. Here, we’ve discussed in detail the several health insurance tax benefits.

Overview of Health Insurance Tax Benefits

Whether you choose individual health insurance or family health insurance, you can enjoy several tax benefits under your policy. The table below gives you a brief on the various health insurance tax benefits you can look forward to when claiming deductions under the old tax regime.

Now that you’ve got an overview of various tax benefits offered by health insurance plans in India, let us further discuss the tax benefits under Section 80D in detail.

Health Insurance Tax Benefits under Section 80D

• Tax Deduction on Medical Insurance Premium 80D

Assume that Mr Iyer recently purchased a health insurance policy that covers himself and his family. He can claim a deduction for mediclaim up to Rs. 25,000 annually for premium instalments. The premium amount can be for himself, his spouse, and dependent children. If he or his spouse is above the age of 60 years (senior citizens), then the limit goes up to Rs. 50,000.

• Tax Deduction on Preventive Health Checkups

Elaborating on the above example, Mr Iyer can claim a tax deduction on his annual preventive healthcare checkups as well. The limit is set up to Rs. 5000 in addition to the aforementioned limit (tax deduction for mediclaim 80D for premium instalments).

• Tax Deductions on Health Insurance Premium for Parents

Now, let us assume that Mr Iyer is also paying premiums of the health insurance policy for his parents. Because of this, he qualifies for an additional tax deduction. We have discussed the tax deduction limit on health insurance for parents in the article further.

Tax Benefits on Health Insurance for Parents

Here's a brief understanding of the tax benefits available on health insurance plans for parents.

Consider the following example to understand how health insurance tax benefits work.

Mr. Anand is 62 years old and has purchased a health insurance policy for which he pays a premium of Rs. 36,000 annually. Additionally, he also pays Rs 28,000 as a premium towards his parent’s Health Insurance policy. His parents are more than 80 years of age, and hence they fall under the ‘super senior’ category. Here is the maximum deduction of mediclaim he can avail under Section 80D.

The maximum health insurance tax exemption limit for senior citizens is Rs. 30,000, hence, Mr Anand can claim his own health insurance premiums as deductions up to Rs. 30,000. Additionally, since his parents are more than 80 years old and fall in the ‘’super senior citizens’’ category, he can avail a deduction of up to Rs. 30,000 on their health insurance policy. Hence, Mr Anand can claim the entire premium amount, which is Rs. 28,000. Therefore, the total claimable deduction for Mr Anand will be Rs 58,000 (Rs. 30,000 + Rs. 28,000).

How to Claim Tax Benefits on Health Insurance Premiums

You need to be eligible to avail health insurance tax benefits. Therefore, we have put together the eligibility criteria and documents required, which will allow you to claim tax benefits on your health insurance plan.

A. Eligibility Criteria

You can avail the medical insurance tax benefit or medical tax benefit under Section 80D for health insurance plans purchased:

1. Either for yourself or your family members.

2. Your children, spouse and parents.

3. Any other family member who is dependent on you.

B. Documents Required

To avail the Section 80D tax benefits mediclaim, you will need the premium payment receipt and policy copy which shows the name and age of the family members as well as their relation to you.

Besides knowing what the health insurance tax benefits are, you also need to know the exclusions under it. We have given an overview of the health insurance income tax deduction below.

Health Insurance Tax Benefits Under Section 80D - Exclusions

Following are the exclusions under Section 80D of the Income Tax Act.

• Group health insurance plans are not eligible to avail any tax benefits.

• The premiums of the health insurance plan paid in cash do not qualify for tax benefits under Section 80D.

How to Maximise Tax Benefits on the Entire Family’s Income?

In most Indian families, both spouses are earning members. If your scenario is similar, you can ask your spouse to buy a health insurance policy for their parents to avail tax benefits under it. That way, they can reduce the family’s overall taxable income.

For instance, if your wife is a working professional, she can buy a health insurance plan for her parents. Besides, you will have a health insurance plan that covers you, your wife, and your children. The premiums paid towards the policy that covers her parents can be claimed for tax deduction under Section 80D.

However, note that deduction of mediclaim under Section 80D cannot be claimed for parents-in-law. So, having separate health insurance plans for your respective parents will allow you to maximise the tax benefits on the entire family’s income.

The following table will help you understand this better.