Deduction 80D: Tax Benefits on Health Insurance

Health insurance policy not only gives insurance cover to a taxpayer but also provides certain tax benefits. Health insurance or Medi-claim policy is a must for all because should you fall sick or meet with an accident, your medical bills could wipe out your savings.

The premium paid towards medical insurance is tax deductible under section 80D of the Income Tax Act 1961.

As per section 80D, an individual or an HUF can claim deduction in respect of the following payments:

  • Medical insurance premium paid by the assessee, being an individual/HUF by any mode other than cash.
  • Any contribution made by the assessee, being individual to Central Government Health Scheme or such other Scheme as may be notified by the Central Government.
  • The sum paid by the assessee, being individual on account of preventive health check-up. Medical expenditure incurred by the assessee, being individual/HUF on the health of a very senior citizen person provided that no amount has been paid to effect or to keep in force an insurance on the health of such person.

An Individual can claim tax deductions in respect of medical insurance policy taken:-

  • in his own name, or
  • in the name his/her spouse,
  • his/her parents and
  • his/her dependent children.

In a case of HUF, the policy can be taken on the health of any member of such HUF.

Deduction on account of medical expenditure shall be allowed only when it is incurred on the health of the aforementioned persons who are very senior citizens.

Very senior citizen’ means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.

Tax Deduction of Health Insurance Premium

Health Insurance premium paid for self, spouse or dependent children is tax deductible up to ₹25,000.00. If any one of the persons specified is a senior citizen and health insurance premium is paid for such senior citizen then the deduction amount is ₹30,000.00. Health insurance premium paid for parents is deductible up to ₹25,000.00. If parents are senior citizens, the maximum allowable deduction is ₹30,000.00. Below table shows tax deductions applicable to health insurance.

Health Insurance

 Preventive Health Checkup

The total amount of deduction for the expenditure incurred on preventive health checkup of the assessee, his family and parents could not exceed ₹5,000.00. Remember, this is not over and above the individual limits as explained above.

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