How does your health benefit policy help you? Primarily by making healthcare more affordable by covering essential costs such as hospitalization expenses, ambulance cost, and more. It all comes with a heavy price, you say? Section 80D of the Income Tax Act of India seeks to provide respite from this expense with exemptions and tax benefits.
What is Section 80D?
Section 80D covers tax rebates on medical insurance policies. It allows individuals to avail tax deductions for premiums paid towards their medical insurance policy, both for themselves as well as for immediate family members. Not to be confused with the insurance exemptions offered under Section 80C of the Income Tax Act , Section 80D is specifically applicable towards premium paid for health insurance policies and expenses incurred for preventive health checks.
Eligibility for Tax Benefits u/s 80D
Anyone can avail tax deductions under Section 80D if you have paid medical insurance premium on policies for:
- Dependent children
- Parents (even for parents who are not dependents)
Please note you can only claim deductions under this section if you have paid the premiums via these mediums: internet banking, credit/debit cards, cheque, or demand draft. Individuals cannot claim deductions for premiums paid through cash.
Important Things to Know About Deductions for Medical Insurance u/s 80D
This table will help you get an easy overview of deductions that can be claimed:
|Medical Insurance Cover||Exemption Limit|
|Self + Family||INR 25,000|
|Self + Family + Parents||INR (25,000 + 25,000) = INR 50,000|
|Self + Family + Senior Citizen Parents||INR (25,000 + 30,000) = INR 55,000|
|Self (senior citizen) + Family + Senior Citizen Parents||INR (30,000 + 30,000) = INR 60,000|
More essential information regarding deductions u/s 80D:
- Individuals are eligible for tax deductions on medical insurance plans undertaken for dependent children, if they are below 18 years and unemployed. An unemployed male child can be covered up to 25 years, while an unemployed female child can be covered as long as she is unmarried.
- While medical insurance premiums paid for parents (dependent or otherwise) can be claimed for tax deductions, medical insurance premiums paid for siblings cannot be claimed.
- Deductions under this section can be claimed on premium paid towards medical insurance either provided by employer or on standalone policies undertaken by the individual.
- Tax deductions are applicable for both health insurance as well as family floater policies.
Tax Deduction for Preventive Health Check-up Under Section 80D
This section allows further deductions for any expenses incurred for preventive health check-ups too. Individuals can avail INR 5,000 towards cost incurred for preventive health checks for self, spouse, children, or parents. It can be claimed for payments made through cash as well. This deduction is in addition to the deduction on premium payment. For example:
|Medical Insurance Cover||Exemption Limit||Health Check Exemption||Total Exemption/Tax Deduction|
|Self + Family + Parents||INR (25,000 + 25,000) = INR 50,000||INR 5,000||INR (50,000 + 5,000) = 55,000|