Health Insurance Tax Benefit 80D

Section 80D of income tax offers tax deductions on a health insurance premium paid in a financial year. This deduction is available for both individuals and Hindu Undivided Families (HUFs) and covers premiums paid for self, spouse, children and parents.

Section 80D's objective is to promote the purchase of health insurance policies, thereby reducing the financial burden of medical expenses and ensuring that taxpayers are financially prepared for
health-related contingencies.

The Section 80D deductions limit depends on the type of health insurance plan, the age of the policyholder, the mode of payment and other factors.

Here are some of the key benefits of Section 80D:

Tax Deduction

One of the key tax benefits under Section 80D is the deduction limit. A maximum deduction of ₹25,000 per year for premiums paid for medical insurance for self, spouse and children. The deduction limit increases to ₹50,000 for senior citizens who are aged 60 or above.

Preventive Health Check-up Cover

Section 80D also provides tax benefits for Preventive Health Check-up expenses. As per the provisions under Section 80D, expenses incurred on preventive health check-ups are eligible for tax deduction, provided they are within the overall deduction limit. The maximum deduction for
preventive health check-ups is ₹5,000 per year.

Additional Deduction for Parents

Under Section 80D, there is an additional deduction available for health insurance premiums paid for your parents, either dependent or non-dependent, which is separate from the deductions available for yourself, your spouse and your children.

Critical Illness cover

Another crucial income tax benefit under section 80D is critical illness coverage for illnesses like cancer, heart attack and more. Under section 80D, you can claim a deduction for the additional premium paid for such coverage.

This section allows taxpayers to claim a deduction for premiums paid towards a critical illness cover for themselves, their spouse, children and parents.

Pre-existing Disease Cover

Under Section 80D of the Income Tax Act, premiums paid for health insurance policies covering pre-existing diseases are qualified for tax deductions, just like regular health insurance premiums. If a policy includes coverage for pre-existing conditions, such as diabetes or hypertension, the premiums paid can be claimed.

If you are an individual taxpayer or fall under the HUF in the Indian Income Tax Act, you will avail of Section 80D health insurance tax benefits for:

• Yourself
• Your spouse
• Your parents
• Your children

An individual or HUF in India can claim health insurance tax benefits under Section 80D medical insurance for payments made for:

• Premium payment for a health insurance plan for self, children, spouse, parents, or other dependants in cash or another mode.
• Whatever expenses are incurred during any preventive health check-ups.
• Expenses made as a contribution to the Central Government Health Schemes or any other such schemes notified by the Indian government.
• Medical expenses incurred for a senior citizen who is not covered under any valid medical insurance plan or scheme.

The tax deductions allowed under Section 80D of the Indian Income Tax Act are ₹25,000 per financial year. However, the limit for senior citizens is ₹50,000.

Below are the acceptable modes of payment for expenses under Section 80D.

A preventive health check-up under Section 80D refers to a deduction allowed for medical expenses incurred for health check-ups. It was introduced in 2013-14 to make health a priority among individuals.

The purpose of preventive health check-ups is to prevent the worsening of illness by doing regular health check-ups. The preventive health insurance tax benefit 80D limit is ₹5000 for all payments made in cash.

Individuals can use this deduction for themselves, their dependent parents, children, or spouses. However, to claim this deduction, some points need to be kept in mind, such as:

• Preventive health check-ups are included in the overall deduction limit under Section 80D, which is ₹25,000 for individuals and ₹50,000 for senior citizens.

• The frequency at which the preventive health check-ups are eligible for deduction is on a per financial year basis.

• Preventive health check-ups should be conducted in recognised institutions or hospitals.
  Let us understand with an example:

Rahul has paid a health insurance premium of ₹23,000 for himself and his family in a financial year. He also had a health check-up during that year, for which he paid ₹5,000. His total expenses would amount to ₹28,000 that year.

As per section 80D, a person can claim tax deductions of ₹25,000 on their health insurance premiums during a financial year. Since the overall applicable deduction limit will be only ₹25,000
for Rahul, only ₹2,000 will be included for deduction for preventive health check-ups.

Also Read: Preventive Health Check-Ups and Tax Deductions

Under Section 80D, maintenance paid for senior citizens' medical expenses without a health insurance policy is applicable for tax deductions. The tax deduction limit, in that case, is ₹50,000 for a financial year.

However, if a senior citizen (individuals aged 60 years or above) has a medical insurance plan, then they are not eligible for this tax deduction.

For example, person X paid around ₹70,000 for their parent's medical expenses. If a person X's parents do not have a health insurance plan, then he is eligible to claim a deduction of up to ₹50,000 at the time of filing tax.

Also Read: How Senior Citizens Can Save Tax With Medical Bills Under 80D?

Most individuals prefer to buy long-term health insurance policies by paying in advance for specified years to receive discounts and benefits offered by insurance providers. If the individual pays a lump-sum amount at the time of policy purchase, then they can easily claim tax deductions under Section 80D.

However, tax deductions for health insurance premiums for multi-years will be limited to the overall ₹25,000 or ₹50,000 deduction limit under Section 80D.

For instance, Person X has paid a lump sum amount of ₹60,000 for a 4-year health insurance policy. In that case, a person can claim ₹15,000 per year as tax deductions for the next 4 years at the time of filing ITR.

Under Section 80DD of the Income Tax Act, tax deduction benefits are offered to individuals with disabilities. As per Section 80DD of the Income Tax Act, individuals can claim a tax deduction of up to ₹75,000 per financial year in case of disability. However, if a disability is 80% or more, then a tax deduction of ₹1,25,000 is allowed during a financial year.

This type of deduction applies to dependents such as children, parents, spouses and siblings. Moreover, the tax deduction under Section 80DD can be claimed if an individual has made lump sum payments or annuities for any scheme to maintain the health of a dependent person with a disability.

Under Section 80DD, a tax deduction is applicable on medical expenses incurred for nursing, treatment, training and rehabilitation of persons with disabilities. However, to avail of the benefit under Section 80DD, a certificate of disability issued by the state or central government medical board needs to be submitted at the time of filing returns.

Under Section 80DDB, individuals can claim tax deductions up to ₹40,000 during the financial year for the treatment of a specified disease such as dementia, chronic renal failure, AIDS, etc. The deduction limit is ₹1,00,000 for senior citizens.

Individuals need to present their medical bills and documents proving the specified disease at the time of filing income tax returns. This applies to medical expenses incurred for themselves, siblings, parents, spouse and children suffering from the specified disease.

The income tax benefit under Section 80D is also applicable for critical illness coverage. Under Section 80D, the premium paid for a critical insurance plan is applicable for tax deductions. The maximum amount the individual can claim depends on the person’s age.

For individuals below 60 years of age, the Section 80D deduction limit for critical illness coverage is ₹25,000. However, for individuals above 60 years of age, the deduction limit is up to ₹50,000.
Let us understand this by example:

Aditya’s family has a genetic history of cancer. To protect his family and loved ones, Aditya has purchased a critical health insurance plan for himself and his wife. The premium for this plan is ₹15,000. He also purchased a plan for his parents above 60 years of age for which he paid a premium of ₹25,000.

Since Aditya did not have any active health insurance policy other than this plan, then as per Section 80D, he can claim the whole ₹40,000 as a tax deduction.

Below are the points to keep in mind while availing of the tax deductions benefits under Section 80D.

• Health insurance tax deductions under Section 80D are only available under the old tax regime. If you have opted for the new tax regime, you will not qualify for these deductions.
• The tax deduction benefits for health insurance premiums paid in cash are not applicable. The deductions are only applicable for premiums paid by other modes such as debit cards, cheques, etc.
• If you default, i.e., you have not paid or missed your health insurance premium payments during a financial year, you will not be eligible for tax deductions u/s 80D during that year.
• The tax deductions are not applicable for health insurance premium payments for siblings, uncles, grandparents, aunts, etc.
• The health insurance premium payment for working children is not applicable for tax deductions.
• Individuals can not make claims on service tax and cess amount included in health insurance premiums.
• Tax deductions (filed by the employee) for a group health insurance policy under an employer are not applicable. You can only claim tax deductions for this policy type, subject to certain conditions. For example, you are paying part of the premiums.

Also Read: Tax Benefit of Group Health Insurance for Employers & Employees

• Premium payment receipts for health insurance premiums.
• Receipts for preventive health check-ups from medical facilities or diagnostic centres.
• Medical bills for treatment of specified diseases.
• Prescription from a doctor for specified diseases.
• Hospital or doctor’s certificate confirming the specified disease.
• Age proof such as birth certificate, Aadhaar card, or passport for senior citizens.
• Health insurance policy document for you and your family members.
• Bank statements or payment evidence for online premium payments or transaction details.

Here are the differences between Section 80D and Section 80C of the Income Tax Act.

Also Read: Income Tax Deduction Under Section 80C

In India, maximising health insurance tax benefits involves fully utilising the provisions under the Income Tax Act.

Combine Policies to Maximise Section 80D Limit

One of the tips to maximise health insurance tax benefits under Section 80 is combining policies for yourself, your family and your parents. This allows you to claim a total deduction of ₹75,000 or even up to ₹1,00,000 if both you and your family members qualify for the senior citizen benefit.

Plan for Preventive Health Check-Ups

Another tip to maximising the mediclaim policy 80D tax benefit is taking advantage of preventive health check-ups. Under this provision, you can claim a deduction of up to ₹5,000 for expenses related to preventive health check-ups. It is an effective way to boost your tax savings while ensuring the health and well-being of your family.

Timely Payment of Health Insurance Premium

Lastly, ensuring the timely payment of your health insurance premium within the financial year is crucial for qualifying for the tax deduction under Section 80D. The premium payment must be made between April 1 and March 31 to be eligible for deductions in that specific financial year.

Now that you are aware of the health insurance tax benefits under Section 80D, you should buy medical insurance immediately if you do not have one. First, however, it is prudent to keep a few things in mind to make the right pick. There are several factors to consider while choosing a health insurance plan. Here are a few pointers that should help:

Choose an Affordable Option

When choosing a health insurance plan, make sure that it is affordable. Budgeting is hugely important when choosing a health scheme. Keep in mind your income, your family size and other requirements and then go for a health insurance plan that works.

Choose One with the Right Coverage

Always choose an insurance plan that will protect you against all health risks. It should cover pre- and post-hospitalisation costs, daycare expenses, other related illnesses, transportation charges, etc. Compare health insurance plans based on their coverage and costs and research thoroughly to choose one that will meet all your needs.

Choose a Plan with Renewability Option

When buying a health plan, check for its renewability options. It is prudent to choose a medical insurance cover that will provide you with a lifetime renewability option. It is better not to opt for a plan that comes with a limited renewability feature.

Check the Network Hospitals Covered

To ensure that you can avail of the best treatment options for yourself and your family, always choose an insurer that offers a wide range of network hospitals. This way, you will be able to get a quick and convenient claim filing process with least documentation.

Choose an Insurer with High CSR

Always buy health insurance online from an insurance provider that has a high CSR. This will ensure that your future claims will not go unanswered or unresolved, no matter what. Also, you will know that your money is in safe hands.

Understanding all about Section 80D deductions is crucial for individuals who want to invest in a mediclaim policy. A health insurance plan not only safeguards you and your family against various unforeseen medical emergencies but also offers tax advantages. With a medical insurance plan, you will get quality medical care in your time of need.

When it comes to the best health insurance plans, TATA AIG offers customised plans based on your unique health needs. For instance, our family medical insurance plan offers medical coverage to policyholders and their families under a single plan. The sum insured by this health insurance plan is distributed among all insured family members.

Not just this, our health insurance plans offer various benefits such as tax benefits, a cashless treatment facility, a hassle-free buying process and more. Secure your and your family's health with our customised health insurance plan.