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Health Insurance 80 D Tax Benefits

Updated On Dec 28, 2020

Nobody plans to fall ill or get a disease yet there are great possibilities of one needing medical attention at some point in life. A lot of people are concerned with the rise in the expenses of healthcare and to deal with its impact that is when health insurance comes into play.
While a health insurance offers protection to the policyholder against medical expenses, it also helps the person in availing tax benefit under section 80D towards the payment of health insurance premium. Hence, making a health insurance plan a significant tax planning instrument that comes as an add-on feature on your investments.

Benefit of Tax with Health Insurance

A tax exemption is offered on the premium paid on a health insurance policy, which acts as a cost-effective tool when any health emergencies arise. Under the Income Tax Act section 80 D, health insurance premium is tax exempted. It is provided on health insurance policy for self, spouse and dependent children. Also, a person can include parents in the health plan in order to lay out the insurance and tax benefits. However, tax deduction can be availed only when the premium is paid through any other source( either debit, credit or net banking) except cash.
The tax exemptions under section 80 D can be availed by both an individual and HUF. Individual can claim tax deduction amount depending upon the members insured and could be from the following sum i.e. Rs 25,000, Rs 50,000, Rs 75,000 or Rs 1,00,000.

  Self, spouse and children Parents Total deduction amount under sec 80 D
Family members who are less than 60 years in age Up to Rs. 25,000   Up to Rs. 25,000
All family members who are less than 60 years in age Up to Rs. 25,000 Up to Rs. 25,000 Up to Rs. 50,000
Members in your family (self, spouse and children), who are under 60 years and parents are more than 60 years in age. Up to Rs. 25,000 Up to Rs. 50,000 Up to Rs. 75,000
Eldest members of the family( self,spouse and children) are more than 60 years and parents are also over 60 years. Up to Rs. 50,000 Up to Rs. 50,000 Up to Rs. 100,000

Actual savings vary based upon the premium paid and the health insurance plan one has. For instance, Ashutosh, aged 50 years buys a health insurance plan for self, spouse and children, pays an annual premium of Rs 20000 and preventive health check up for Rs 3000. Now, he is entitled to claim tax exemption of Rs 23000 under section 80 D of Income tax act.

Documents Required to Claim Tax Deduction For Health Insurance

Tax deduction can be claimed by showing the following documents:

  • Premium Payment Receipt
  • Copy of Health Insurance Policy (showing name of family members, their age and relation).
  • 80 D Certificate from the Insurance company(If premium paid on parents health cover)

Points to Remember About Health Insurance Tax Deduction

You should keep the following points in mind regarding tax deduction:

  • Read the policy document carefully, especially the tax exemption clause.
  • Do not pay the premium towards your health insurance policy in cash.
  • Under section 80D, the maximum deduction that you can avail is Rs 1 lakhs, if you buy health cover for self and parents and the age of both is above 60 years.
  • Tax deduction for the payment of premium towards health insurance policy can also be availed by Hindu Undivided Family (HUFs).
  • Section 80D tax benefits are in addition to section 80 C up to a limit of RS 1,50,000.
  • Also, senior citizen deduction amount can be used against healthcare expenses.
  • In case, your health insurance plan includes critical illness insurance add-on cover, then the premium paid towards the add-on is eligible to be claimed for tax exemption.
  • Tax deductions are valid just on premium paid towards the health insurance policy and not on extra charges incurred like service charge, GST, etc.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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