Health Insurance Tax Benefits – Deduction Under Section 80D

Health Insurance Tax Benefits

Section 80D- Tax Savings on Health Insurance

Nowadays, it is common for families to opt for all kinds of insurances. The fact that it gives a kind of assurance to the people that even if they pass away, their loved ones will be able to continue living on without any financial burdens, has helped make the insurance popular and highly in-demand.

Nowadays, there are insurances for life, fire, vehicles, houses, body parts, health, businesses, and property; such is the lucrative market for each. What also helps is that part of the premium paid can be reclaimed as part of one’s income tax returns, so it isn’t like one is losing their money.

Insurance is not rocket science, and the process is simple: choose a plan and pay monthly or yearly premium amounts to the insurer. The latter, in return, will provide cover to the insured in the appropriate context. The most popular form of insurance is perhaps life, but in terms of requirement, health insurance is up there as one of the most important to possess.

What people should also know is that apart from helping them gain reimbursement for their medical expenses, a health insurance also acts as a good tax-saving tool, with the insured party considerable gaining exemption under Section 80D.

Exemption under Section 80D

Under Section 80D one can avail tax deduction if he/she has paid medical policy premium for:

  1. Self
  2. Spouse
  3. Children (dependent)
  4. Parents

A taxpayer can avail tax deductions under Section 80D if they have had expenses like medical insurance and preventive health checkups, among others. A maximum income tax deduction of Rs 60,000 can be procured. One can even claim a tax deduction of up to Rs 5,000 for preventive health checkup expenses within the Rs 60,000 limit.

What Kinds Of Deductions Are Available?

One can claim these income tax deductions under Section 80D:

  1. Deduction on the premium for health insurance paid for self and family
    Deduction of up to Rs 25,000 can be claimed, as per the newest rules for the assessment year 2017-18. If a senior citizen is applying, he/she will get higher deduction amount of Rs 30,000.
  2. Deduction on the premium for health insurance paid for parents
    On top of the first type, if one is paying a premium for parents’ medical insurance as well, he/she will get a deduction off Rs 25,000. If the parents are senior citizens, the deduction amount goes up to Rs 30,000.
  3. Deduction on health checkup preventive expenses
    As mentioned above, deduction amount under this class is Rs 5,000. But this amount cannot be gained in addition to the maximum deduction of Rs 60,000. This is also the highest amount one can gain as a deduction for preventive health checkups.
  4. Deduction on medical expenses for those above 80 years of age
    If some super senior citizen (above 80 years) in one’s family is not covered under any medical insurance, a tax deduction to the tune of Rs 30,000 can be claimed, provided their medical expenses were taken care of by the taxpayer.

Example

For better understanding, let’s see an example. Xander is 63 years old, and has a medical insurance policy in his name, for which he pays a premium of Rs 40,000. In addition to this, he also pays Rs 30,000 premium annually as health insurance for his mother, who is 85 years old. What is he eligible for a tax deduction under Section 80D?

He is above 60 years old, which makes him a senior citizen. Hence he is entitled to a maximum tax deduction of Rs 30,000, for the Rs 40,000 premium that he pays. Along with that, he can also apply for a deduction of the maximum amount of Rs 30,000, since that is the amount he pays as medical expenses for his super senior mother. This amount is also the maximum he can apply for deduction under the 80+ years rule.

This means he is eligible for a return on tax deduction of Rs 60,000 (Rs 30,000 + Rs 30,000).

Important Things to Remember

Nowadays, there are many kinds of health insurances to choose from, each with its own advantages and perks. Hence, some steps should be followed to choose the best possible option for the person and his/her family.

  1. Know what the needs and requirements of the family members are before choosing the best policy.
  2. Try getting policies that are lifelong, as opting to get one after a certain age is difficult.
  3. Get health checkups at regular checkups for family members to know the best course of action in case of medical emergency.
  4. This will also ensure that there is a health/checkup history that can be referred to as and when needed.

Dependent With Disability

  1. The last point to remember is that there are also tax deduction rules for disabled, with an individuals’ spouse, parents, children, and siblings eligible for this type. This is irrespective of whether the person is wholly or partially dependent on the individual.
  2. There is also provision for members of Hindu Undivided Family to come under this type, provided they haven’t already claimed any deduction under Section 80D.

This is a general article for the user information, The data we have mentioned over here may not be correct. We have published this data by last year 2017 record in health insurance industry, kindly visit the web for more correct information about health insurance and tax benefits.

Read more articles about recent changes in health insurance tax benefits:

Budget 2018 proposes tax, other benefits for senior citizens

80D tax benefit for multi-year health plans-2018

About Archana 36 Articles
Archana is an independent finance and investment advisor since 4 years and recently added with Investment Pedia. User are welcome to put questions on her contributions.

4 Comments

  1. Nice Blog! There are many benefits of health insurance under section 80D. One benefit is Income Tax Law also permits you to avail tax exemption up to Rs.5000 for the expenses incurred for preventive health checkups of your parents who are above 60 years.

  2. Hello there, You have done an excellent job. I will certainly digg it and personally recommend to my friends.
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  4. Complete inform on 80D, encouraging article, I like Deduction on health checkup preventive expenses the most, the majority is not aware of the benefits of health checkup both for income tax as well as life.

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