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Have a health insurance? Secure a tax deduction under section 80D

Health insurance is not a luxury but a necessity. Apart from providing financial help in case of any medical issues, health insurance offers tax deduction under section 80D of the Income Tax Act.

Health insurance tax benefit under Section 80D
  • Under Section 80D, you can claim a tax deduction of up to ₹25,000 in a year for medical insurance premiums paid for self, spouse and children, if you are below 60 years of age.
  • If you have also paid a premium for parents who are below 60, the deduction claim will be ₹25,000. If the parents are senior citizens, then the maximum deduction claim is capped at ₹50,000, so effectively a deduction upto ₹75,000 can be claimed.
  • In case both the policyholder and the parents are senior citizens, then the deduction claim can go up to ₹1 lakh.
Deduction under Sec 80DD
  • Further, under Sec 80DD, if the policyholder incurs expenses for treatment of a dependent (dependents refer to any siblings, parents, spouse or children) who is differently-abled, the deduction limit is ₹75,000 for a disability of over 40 % but less than 80 per cent.
  • Dependants refer to siblings, parents, spouse or children. In cases of severe disability, i.e., over 80 %, the deduction limit is ₹1.25 lakh.
  • However, if the differently-abled person has already claimed a tax benefit under 80U, he or she cannot be considered for deduction under 80DD.
Benefit under Sec 80DDB
  • There is a health insurance tax benefit under Sec 80DDB for policyholders with dependents suffering from specific ailments and conditions such as Parkinson’s, cancer, AIDS, haemophilia and thalassemia, among others.
  • In such cases, a tax benefit of ₹40,000 per year is allowed.

Although insurance firms allow premiums to be paid in cash, a health insurance tax benefit cannot be claimed if cash payment has been paid as premium. This is an important aspect that policyholders should always bear in mind.

A working couple can both buy health insurance for their respective parents so that further tax benefits can be claimed. Considering a scenario where one of them buys health insurance for the family, and both buy a policy for their parents, and both sets of parents are over 60, the family’s overall tax saving deduction limit will go up to ₹1.25 lakh, assuming the couple is under 60 years of age.

In conclusion, while health insurance provides cover in case of any medical emergencies, it also offers the benefit of tax-savings.

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