Health care costs are constantly rising and an unforeseen medical condition may create havoc on your financial stability. A health insurance policy ensures that you are financially capable to handle medical emergencies.
In addition to providing financial protection, a health insurance plan offers several tax benefits. Any expense paid as medical insurance premium, preventive checkup, and other costs are eligible for tax deductions under section 80D of the Income Tax (IT) Act.
Eligibility criteria
The health insurance tax exemption is available on the premium paid for a health plan for self, spouse, dependent children, and parents (who may or may not be dependent on you). An additional amount of INR 5,000 (within the overall limit) may be claimed as section 80D medical insurance tax benefits for preventive checkup expenses.
Types of deductions
You may claim four types of deductions under section 80D as listed below:
- Health insurance premium paid for covering self and family
- Medical expenses incurred for super senior citizens
- Medical insurance premium paid on behalf of parents
- Expenses incurred towards preventive checkup
Quantum of deduction available
The table below summarizes the health insurance tax benefit available under section 80D:
| Premium Amount (INR) | Total Deduction (INR) | ||
| Self, spouse, and children | Parents | ||
| If you and your parents are aged less than 60 years | 25,000 | 25,000 | 50,000 |
| If you and your spouse are less than 60 years but parents are aged over 60 years | 25,000 | 50,000 | 75,000 |
| If you, your spouse, and parents are aged over 60 years | 50,000 | 50,000 | 100,000 |
Hindu Undivided Family (HUF)
A HUF may claim medical insurance tax benefit for members included in the HUF. The deduction is capped at INR 25,000 if the insured member is aged below 60 years. This amount increases to INR 50,000 if the age of the insured member exceeds 60 years.
Preventive health checkup expenses
Another benefit available under section 80D is for expenses incurred towards preventive health checkup for self, parents, and family. The maximum deduction is capped at INR 5,000, which is within the overall limit, as specified under the rules of section 80D.
Deductions for super senior citizens with no mediclaim policy
If your parents are super senior citizens (aged over 80 years) but are not covered under a health insurance policy, tax benefits are still available. If you have taken care of your parents’ medical costs, you may claim a tax deduction of up to INR 30,000 under this section.
Single premium health insurance policy
A new provision related to single premium health insurance policies was introduced in the Budget 2018. Under the new provision, if you have paid a lump sum amount for a health insurance policy with a duration exceeding one year, you may claim fractional deduction under section 80D for the current assessment year. The fractional amount is calculated by dividing the total premium by the number of years. However, the deduction must adhere to the maximum limits, as specified by section 80D.
An emergency may come as a surprise especially if it is a medical condition. It is important to procure adequate health coverage to meet such emergencies. You may use an online family health insurance premium calculator to understand the premium and adequate coverage.
Including a health plan in your financial portfolio is critical. As discussed above, the government offers several tax incentives to encourage you to safeguard your financial well being with medical insurance.
