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How Senior Citizens can save Tax with Medical Bills u/s 80 D?

  • Author :
  • TATA AIG Team
  • Published on :
  • 02/12/2022

We all like to save our hard-earned money. Perhaps that is why we are so enticed by the concept of discounts, redeemable coupons, and loyalty cards on our everyday purchases.

A greater chunk of these “discounts,” however, comes from investing in financial tools such as mutual funds and health insurance. Not only do they offer benefits in the long run, but they also come with certain short-run rewards. And the medical expenses deduction under income tax act for senior citizens is one such saving that enables you to enjoy the golden years of your life in a stress-free manner. Let’s understand the medical expense deduction and the aid of Section 80D for senior citizens in better detail.

Concerns with Senior Citizen Medical Expenses

With the onset of the infamous pandemic, every individual has realised the importance of a comprehensive medical insurance plan to deal with medical emergencies. Aside from bearing medical expenses, health insurance also comes with associated benefits such as tax savings. Just as individuals can purchase a health insurance plan to cover themselves and their families, they can do so for their aged parents as well. The problem lies herein: when one grows older, the premiums payable for a medical insurance plan tend to be much higher. Not everyone can afford to pay these premiums, and insurance providers may also be reluctant to provide health insurance to older individuals suffering from pre-existing ailments.

The Budget of 2018, however, put some of these healthcare concerns at ease for individuals over the age of 60 by amending Section 80D of the Income Tax Act, 1961. Senior citizens who incur high medical expenses and cannot invest in a medical insurance plan owing to pre-existing diseases can get a deduction on health-related expenditures.

Claiming a Deduction on Section 80D Medical Expenditure for Senior Citizens

Section 80D of the Indian Income Tax Act, 1961 enables income tax rebate for senior citizens on the medical expenses that they may have incurred. Even adults can claim a rebate for medical expenditure for senior citizen parents. All individuals above the age of 60 are considered senior citizens. And so, the cost of any medical treatment as well as the premiums paid for the health insurance plan – by an individual for their parents or by senior citizens themselves – are eligible for the deduction under Section 80D.

Under Section 80D medical expenditure, individuals can claim a maximum deduction of ₹50,000 in a financial year. The following table elaborates on the medical expenses deduction under income tax act for senior citizens:

Individual Paying the Medical Insurance Premium For Adults For Senior Citizens Maximum Tax Rebate u/s 80D
The senior citizen themselves N/A ₹50,000 ₹50,000
Adults younger than 60 years of age paying the premium for parents older than 60 ₹25,000 ₹50,000 ₹75,000
Individual over the age of 60 paying their own premium and the premium of their senior parents ₹50,000 ₹50,000 ₹1,00,000

The above table better helps understand the 80D medical expenditure for senior citizens and how one can save money for health-related costs incurred in a financial year. However, the medical expense deduction is different based on each scenario. Let’s understand this situational income tax rebate for senior citizens.

Section 80D Medical Expenditure Rebate in Different Scenarios

Under the amended 80D for senior citizens, tax rebate of up to ₹50,000 can be claimed for the following health-related expenses:

  • Preventative health check-ups
  • Premiums payable for the health insurance plan
  • Medical expenses incurred on an individual or their family members
  • And finally, if you are a senior citizen, then you also get a rebate under Central Government Health Scheme (CGHS)

In the case of preventative health check-ups, the maximum tax deduction that can be claimed is ₹5000 in a financial year. This deduction falls under the overall rebate of ₹50,000 for senior citizen medical expenses. In the following table detailing tax rebate limitations u/s 80D for different situations, SC stands for senior citizens whereas NSC stands for non-senior citizens:

Which Medical Expenses are Included for Tax Deduction u/s 80D?

Any ailment or health-related expense that is not defined in the Income Tax Act will not qualify for tax deduction u/s 80D. Some of these non-qualifying expenses include cosmetic surgeries, non-prescription drugs (aside from insulin), gym memberships, etc. However, all the health-related expenses incurred on doctor’s consultations, medications, hospitalisation expenses, as well as medical devices such as hearing aids, pacemakers, etc. are eligible for deductions.

Aside from Section 80D, there are also certain health conditions and ailments that are covered under Section 80DDB such as cancer, AIDS, Parkinson’s, etc. Under this section, NSCs can claim a tax deduction of up to ₹40,000 whereas SCs can claim a tax rebate of up to ₹1 lakh.

Important Details for Claiming Tax Deduction Under Section 80D of the Income Tax Act

Whether you are claiming a tax rebate on medical expenditure for senior citizen parents or yourself there are certain important pointers to bear in mind:

  • To get the tax deduction u/s 80D on your health insurance premium, make the payment digitally or using a debit or credit card, through net banking, or via UPI. Don’t use cash as a payment mode to pay the premium for your medical insurance plan.

  • Although there are no specific documents required to get a tax rebate on medical expenses, it is prudent to save documentary evidence. This includes bills of medical expenses, reports of diagnosis, prescriptions by doctors, etc.

To Conclude

Investing in a comprehensive health insurance plan must be the top priority for senior citizens. This helps take care of the contingency medical expenses at a time when healthcare costs have been soaring. Moreover, the tax benefits that can be availed from investing in health insurance can further enhance your savings. However, before investing in a medical insurance plan, it is always advised to compare health insurance policies to make an informed decision. The comprehensive health insurance by Tata AIG covers the policyholder against a host of medical scenarios. It comprises special policies specifically curated for individuals over the age of 60 that are packed with benefits and offered at reasonable prices.

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