Income Tax Benefits on Health Insurance

When you buy a health insurance plan, you become eligible for tax exemption under Section 80D of the Income Tax Act for the premium paid. You can avail tax deduction if you pay the premium for self, spouse, dependent children, parents.

Tax Saving Options with Health Insurance

Apart from reimbursing expenses incurred on the medical treatment, health insurance plans also act as an efficient tax-saving tool. The policyholders qualify for substantial tax deduction under Section 80D of the Income Tax Act, 1961 on the health insurance premiums paid to buy health insurance policies. Whether self-employed or salaried, the policyholders can avail tax benefits under the Income Tax Act. Availing tax benefits reduces the annual tax liability of the policyholder thereby offering him/her dual benefit of health coverage as well as tax deductions.

Every health insurance policy allows you to avail tax benefits on the premium paid for it whether the policy belongs to the proposer, his/her spouse, children, or parents. When buying a health insurance policy for parents, one must make sure to get the required coverage for all the possible medical conditions instead of just looking for higher tax benefits. This will help in getting the most suitable health insurance policy.

Income Tax Exemption Under Section 80D

As per Section 80D of the Income Tax Act, the premium paid for a health insurance policy is deductible from the taxable income. The upper limit for deductible amount is Rs.  25,000 and can be extended for up to Rs. 50,000 for senior citizens (with effect from 1 April, 2018). This means that an individual can enjoy a deduction of up to Rs. 75,000 from the taxable income. In rare cases, when the age of both the proposer and his parents is more than 60 years, the deductible amount can extend up to Rs. 1,00,000 (Rs. 50,000+Rs. 50,000).

Deduction on Preventive Medical Checkups

You can save tax on preventive health checkups on a yearly basis. Under this feature, you can claim a maximum amount of Rs. 5,000. 

Save Income Tax for Health Insurance Premiums Paid for Parents/Guardians under Section 80D

You can enjoy a tax exemption of up to Rs. 25,000 every financial year against the premium paid for guardians. In case, your parents come under the senior citizen category, then the maximum limit extends up to Rs. 50,000 a year. The limit additionally comprises Rs. 5,000 towards annual health checkups of your parents.

Different Scenarios to Save Tax Under Section 80D

Scenarios indicating eligibility and deduction for saving tax under Section 80D: 

1. You and your parents below 60 years - Up to Rs. 25,000 claim allowed for self, family and children. An additional Rs. 25,000 claim allowed against the premium paid for parents. Total amount = Rs. 50,000.

2. You and your family below 60, but parents above 60 years - Up to Rs. 25,000 claim allowed against the premium paid for self, family, and children. An additional Rs. 50,000 claim amount for the premium paid for parents. Total amount = Rs. 75,000.

3. You, your family and parents above 60 years - Up to Rs. 50,000 claim against the premium paid for self, family, and children. Moreover, up to Rs. 50,000 claim amount for the premium paid for parents. Total amount = Rs. 1,00,000.

4. HUF (Hindu Undivided Family) - Up to Rs. 25,000 (premium paid for self, family, and children) and up to Rs. 25,000 (premium paid for parents) can be claimed. Total amount = Rs. 25,000 as tax benefits for parents available only if they are senior citizens.

5. Non-resident individual = Up to Rs. 25,000 claim amount for premium for self, family, and children. Parents considered for tax benefits only if they are senior citizens. Thus, the total amount = Rs. 25,000

Income Tax Saving for Senior Citizens

Following tax exemption under Section 80D on premium for senior citizens (60 years old or more, but below 80 years) is allowed.

  1. Claim deduction of up to Rs. 50,000 allowed on medical insurance premium during every fiscal year
  2. Rs.1 Lakh for medical treatment of particular critical illnesses
  3. If a super-aged father lacks insurance and mother is a senior citizen, a tax deduction of Rs. 50,000 can be claimed.

Benefits of Health Insurance

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Health Insurance Tax Benefits FAQs

  • Will I be eligible for tax benefits if I buy an indemnity based plan or fixed benefit plan?

    Yes, you will be entitled to tax benefits, irrespective of your policy type purchase. 

  • Can I avail of tax benefits on preventive health check-ups?

    Yes, you can avail tax benefits of up to Rs. 5,000 for preventative health check-ups under Section 80D of the Income Tax Act on a yearly basis. 

  • I want to pay my health insurance policy premium in cash. Will I be allowed to avail tax benefits in that case?

    No, you will not be allowed. If you want to be eligible for tax benefits, it is advised to pay your policy premium in payment modes other than cash. You can either choose internet banking, cheque, credit/debit card, or bank demand draft for premium payment purposes.

  • Can I avail tax benefits on premium payment made for a policy covering relatives other than my spouse, children, and parents?

    According to Section 80D of the Income Tax Act, you are allowed to avail tax benefits only on the premium paid for self, spouse, dependent children, and parents. Premium paid towards a brother, sister, grandfather, grandmother and other relatives cannot be claimed as a deduction for availing tax benefits. 

    To learn more about tax benefits, call our experts at 7551196989. We will also help you gather correct information about health insurance plans for you and your parents and continue to offer assistance even after you buy a policy for you.

  • Are there any tax deductions for expenses incurred by an individual for treatment of certain diseases?

    As per Section 80DDB, the expenses incurred by an individual on the treatment of some specific diseases are tax-deductible. These diseases include cancer (malignant), AIDS, Parkinson\'s disease, neurological disorders, hemophilia, chronic renal failure, and thalassemia. For people aged below 60 years, the upper limit for tax benefit is Rs. 40,000 and for those aged above 60 years, it is of Rs. 1 lakh.

    To learn more about tax benefits, call our experts at 7551196989. We will also help you gather correct information about health insurance plans for you and your parents and continue to offer assistance even after you buy a policy for you.

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