Important Tax Benefits You Can Claim on Your Health Insurance

Through the Insurance Regulatory and Development Authority of India (IRDAI) and the Income Tax Act, the Government of India allows a tax deduction for medical insurance premiums and medical expenses to the individuals or HUF category of taxpayers only. So, the individual and HUF taxpayers can avail of insurance for:

• Self

• Spouse

• Dependent children

• Parents

Any other entity, such as a company or firm, cannot claim a deduction under Section 80D. Moreover, tax benefits can be availed only against the premiums paid towards the above-declared relationships.

1. Deduction under Section 80D of the Income Tax Act:

Along with providing financial protection in case of a medical emergency, health insurance also acts as an efficient tax-saving tool. The premiums paid towards your health insurance policy offer tax benefits under Section 80D of the Income Tax Act, 1961. Moreover, the health insurance premiums paid for your family, including spouse, children, and parents, are also eligible for tax exemption under Section 80D. These tax benefits are offered irrespective of the type of plan you choose, i.e., individual health insurance plan, family floater health insurance plan, senior citizen health insurance plan, or top-up health insurance plan. Here's how Section 80D of the Income Tax Act offers tax deduction benefits against health insurance premium payments:

• For Self And Family:

  You can claim up to Rs 25,000 in a financial year, including the amount for you and your family (spouse and dependent children). If the eldest member in your family (self/spouse) is 60 years and above, you can claim up to Rs 50,000 against the premiums paid towards your family's health insurance.

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• For Parents:

  You can claim up to Rs 25,000 separately for premiums paid towards your parents who are below 60 years. If your parents are senior citizens (above 60 years), you can claim up to Rs 50,000 for the premiums paid for their health insurance.

• Members of HUF and Non-Resident Individuals:

  Members of HUF and Non-resident individuals can claim a tax deduction of up to Rs 25,000 for the premiums paid towards the health insurance of self, family, and parents.

  Individuals Covered	Premium Paid (Rs)		Deduction Under 80D (Rs)
  	For Self, Spouse, Children, and Parents Below 60 Years	For Senior Citizen Parents
  Self + Family	25,000	-	25,000
  Self + Family + Parents Below 60 Years	25,000 + 25,000	-	50,000
  Self + Family + Senior Citizen Parents	25,000	50,000	75,000
  Self + Family (with the eldest member above 60 years) + Senior Citizen Parents	50,000	50,000	1,00,000
  Members of HUF and Non-Resident Individuals	25,000	25,000	25,000

  (Source: PersonalFN Research Team)

• For Health Checkup Facility:

  Apart from the premium payment deduction, Section 80D allows a tax deduction of up to Rs 5,000 per financial year for a health checkup that you might seek. These health checkups are preventive in nature and can be sought to identify illnesses at an early stage. However, this tax deduction is not over the above-mentioned limits of your insurance premium, and it can be claimed as a sub-limit within the above-admissible deductions.

2. Deduction Under Section 80DD of the Income Tax Act:

You can claim a tax deduction of up to Rs 75,000 against the premiums paid towards the health insurance of a dependent with a disability. This amount is based on the expenses incurred for nursing, medical treatments, rehabilitation, etc. Moreover, in case of an extreme disability, you can claim up to Rs 1.25 lakhs. For this specific deduction, dependents can be your spouse, children, parents, and siblings. However, you are required to submit supporting medical documents to claim a deduction under Section 80DD.

3. Deduction Under Section 80DDB of the Income Tax Act:

If you or your dependents, including spouse, children, parents/guardians, and siblings, are being treated for a specified illness or ailment, such medical expenses are allowed as a tax deduction of up to Rs 40,000 under Section 80DDB of the Income Tax Act. However, the amount is subject to caps on medical conditions. If you are claiming for yourself, a family member, a sibling, a parent, or a senior citizen, the tax benefit is extended to Rs 1 lakh. This includes medical treatments for diseases or ailments specified in Rule 11DD of the Income Tax Act.

Important Note:

The above-mentioned tax benefits can be availed when the premiums are paid through internet banking, mobile banking, cheque, draft, debit card, credit card, or Unified Payment Gateway (UPI). If you have paid the health insurance premiums in cash, you cannot avail of the tax deductions under these sections. Furthermore, tax benefits are not extended to group health insurance or corporate health insurance provided by the employer. However, payments towards preventive health checkups can be paid by cash and can be claimed for deduction.

Please note that tax benefits are subject to changes in tax laws.

To conclude:

In the absence of sufficient health insurance coverage, you might have to liquidate your investments or take a loan to pay the unexpected healthcare expenses. Hence, assessing your medical requirements and buying adequate health insurance coverage is necessary. Now that you know the benefits of health insurance and how it can be an efficient tax-saving tool, stop worrying about medical emergencies and payment of income tax and take advantage of health insurance plans.

Warm Regards,
Ketki Jadhav
Content Writer