*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Health Insurance is intrinsic to financial planning in modern times due to the rapid exponential rise in healthcare cost in India. Boasting one of the best healthcare facilities in the world, any medical emergency needing hospitalization is certain to burn a hole in one's pocket, apart from the emotional trauma one has to suffer. Health Insurance is just the tool that helps overcome the sudden financial crisis, as one is prepared to counter medical emergencies, as and when it emerges.
But there is more!
Almost all health insurance plans come with an alluring benefit that is tax benefits.
Section 80D of the Income Tax Act of India allows for availing tax benefits for the money spent on maintaining your health and health insurance plan. The deductions that are allowed under this section are
The premium paid by an individual for health insurance plans decreases the taxable income and hence the tax liability. Individuals who pay their health insurance premiums and are under the age of 60 years can avail of a medical insurance tax exemption of up to Rs 25,000 per year. If they are above 60 years of age, they are eligible for claim a deduction of up to Rs 50,000 with senior citizen health insurance. If an individual pays the premium for the health insurance of parents less than 60 years of age, they can claim a further exemption of up to Rs 25,000 annually and Rs 50,000 if their parents fall under the category of senior citizen health insurance plan.
However, premiums paid via internet banking, credit card, debit card, cheque or draft are only eligible for tax exemption, where payment made through cash remains ineligible.
Let’s have a glance at the tax benefit one can claim under health insurance:
Category |
Deduction |
Premium paid for |
Deduction |
Health checkup up |
Total Exemption |
You and your family are below 60 years |
Rs 25,000 |
Parents below 60 years |
Rs 25,000 |
Rs 5,000 |
Rs 55,000 |
You and your family |
Rs 25,000 |
Senior citizen parents |
Rs 50,000 |
Rs 5,000 |
Rs. 80,000 |
You(Senior citizen) and your family |
Rs 50,000 |
Senior citizen parents |
Rs 50,000 |
Rs 5,000 |
Rs.1,05,000 |
Income Tax Act section 80D provides tax deductions on premiums paid towards buying or renewing an existing health insurance policy. A taxpayer can claim the tax benefits only for those premiums paid during a particular financial year. Tax deductions are valid only for the present term and not for past or future payments of premiums.
The deductions u/s 80D can be claimed by an individual as well as the Hindu Undivided Family. The deduction limit under section 80D is not a clear-cut value. The deduction under section 80D is flexible and allows the taxpayers to include their families, also parents who may or may not be senior citizens. There are many ways to spread the benefits of this deduction to cover three generations of family members. If thought well, young taxpayers can include their parents into this insurance plan, who are not qualified for health insurance plans.
The combinations are:
Self |
A |
Self + spouse |
B |
Self + spouse + dependent children |
C |
Self + spouse + dependent children + dependent parents |
D |
Tax benefits are offered to plans like family floater and mediclaim but also plans like a daily hospital cash plan, or a critical illness plan allows medical insurance tax exemption
An individual has to initially check from the income tax department website the amount of deduction available under section 80D for that particular year in which he/she has paid his premiums of the health insurance plan.
The documents required to claim the tax benefits are:
Tax benefits on health insurance can be claimed at the time of filing income tax returns.
There are certain things that a health insurance plan owner needs to consider while reaping health insurance tax benefits:
Health insurance plans are always beneficial with their different features. It can be considered as a necessity of the hour. One of the benefits is surely income tax reduction, but never buy a health insurance plan just to get the tax benefits. Don’t be underinsured. The tax break is a bonus, of course, and can lead to savings of an individual.
Ans: If a person pays medical expenses that are not covered by the state or by private health insurance, a person can claim tax relief of some of those expenses.
Ans: As a matter of record and proof at a later date. It is always advisable to retain the receipts of the payment in your tax file.
Ans: Budget 2018 has amended section 80D of the income tax act, which allows a deduction of medical expenditure for senior citizens.
Ans: A person can claim medical expenses for 12 months only each year.
Ans: It can be claimed while filing the income tax return.
Ans: The tax benefits can be availed for the particular year in which the premium was paid, at the present time.