Is Health Insurance Tax Deductible

To encourage people to add medical coverage to their insurance portfolio, the government offers tax benefits on health insurance premiums under Section 80D of the Income Tax Act. Section 80D of the Income Tax Act, 1961 allows eligible taxpayers to avail tax deductions on the total premium paid towards health insurance in a financial year. It is available on regular health insurance premiums along with the premiums paid for top-up plans and critical illness plans. You can avail Section 80D deduction on premiums paid towards buying health insurance for self, spouse, dependent children and parents.

Deduction under Section 80D for Health Insurance Premium Paid for Parents

The medical insurance premium paid for parents additionally qualifies for the Section 80D deduction of up to Rs 25,000 every financial year. But if both your father and mother or either of them is a senior citizen, then the maximum tax rebate limit goes up to Rs 50,000 in a financial year.

Deduction Available under Section 80D of the Income Tax Act

Under Section 80D, you are allowed to claim a tax deduction of up to Rs 25,000 per financial year on medical insurance premiums. This limit applies to the premium paid towards health insurance purchased for you, your spouse, and your dependent children.

However, if either you or your spouse is a senior citizen (i.e. aged 60 years and above), then the 80D deduction limit goes up to Rs 50,000. Similarly, tax deductions for members of HUF (Hindu United Families) are Rs 25,000 and Rs 50,000 (previously Rs 30,000) if your age is less than 60 years and above 60 years respectively.

Deduction on Preventive Healthcare Check-ups under Section 80D

You can get tax deductions on the cost of preventive health check-ups annually under Section 80D of the Income Tax Act. It was introduced by the government to encourage people to get preventive health check-ups done regularly for timely deduction of an illness or health condition. You can avail this tax benefit on the payment made towards the preventive health check-up undertaken for yourself, your spouse, children and parents. You can claim a preventive health check-up deduction for up to Rs 5,000 per financial year under Section 80D. This preventive health check-up deduction is included within the aforementioned 80D limit of Rs 25,000 for individuals and Rs 50,000 for senior citizens. 

Medical insurance premiums should be paid through non-cash modes to be eligible for Section 80D deductions of the Incomes Tax Act. You can pay the premium through online banking, cheque, demand draft, debit or credit cards, etc. Section 80D deduction is not accessible on cash payment of the premium.

However, this condition does not apply to the payment for preventive health check-ups under Income Tax Act. You can avail preventive health check-up deduction on tax even if the payment was made in cash.

Conclusion

To get tax benefits under section 80D, only the taxpayer should pay health insurance premiums. If the premium is paid by a third party, then the taxpayer will not be eligible for deduction u/s 80D. Moreover, if the premium payments are paid in cash, taxpayers will not be eligible for tax benefits.

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