The Government of India incentivises health coverage by offering tax benefits on health insurance premiums, encouraging individuals to avoid out-of-pocket expenses. These tax benefits are available as per the provision of Section 80D of the Income Tax Act, 1961.  

 

According to Section 80D, a deduction is available on the total amount you pay as insurance premiums for critical health plans or top-up health insurance. You can claim the tax benefit on a health plan you buy to cover: 

• Yourself 

• Your spouse 

• Dependant parents

• Children

Now that you are familiar with the Section 80D income tax provisions, here is a brief overview of the inclusions.

 

The deduction applies to both individual and family floater plans. Even when you invest in a Central Government Health Scheme or Mediclaim, Section 80D deductions are applicable. 

 

One essential benefit for senior citizens is that even if they are not paying any premium, a Section 80D deduction is available for their medical expenses. 

 

Here is a simple breakdown of the limits in a tabular format:

Disclaimer: The limits are subject to change as per the latest amendments.

Now that you know the Section 80D limit, be aware of a few eligibility terms to get this deduction. The 80D income tax deduction is applicable for all individuals, including NRIs and members of a HUF, who pay medical insurance premiums. 

 

Senior citizens' medical expenses qualify for the Section 80D exemption, exclusive to individual taxpayers. Businesses or firms cannot avail of Section 80D tax benefits.

 

To understand the deduction limit better, consider this scenario:

• Your age is 40 years

• Your father is 70 years old 

• You pay a premium of ₹40,000 for yourself

• You pay a premium of ₹45,000 for your father

 

Here:

• You can claim an exemption up to ₹25,000 for yourself

• You can also claim up to ₹50,000 for your father’s health insurance premium

 

To sum up, you can get a deduction of ₹75,000 out of the ₹85,000 you pay in premiums. 

 

If you're also above 60 years, you can claim the full ₹85,000 deduction since the maximum limit is ₹1 Lakh. However, if your father was under 60, you would only be able to claim a deduction of ₹50,000. 

Here’s an overview of the tax benefit available under Section 80D: 

• Both you and your parents can partially pay premiums for eligibility

• Sibling's health cover premiums are not eligible for tax benefits

• Deduction excludes service tax or cess from the payable premium amount

• Premiums must be paid using non-cash modes to qualify for deduction

• Cash payments for preventive health checkups are exempt from this requirement

While knowing inclusions is essential, you also need to be well aware of exclusions to enjoy Section 80D tax benefits:

• Default in premium payments during a financial year

• Premium paid by the employer for group health insurance 

• Premium paid for employed or working children 

• Premium paid for siblings or other relatives such as uncles, aunts, and grandparents 

• Premium paid in cash