Tax Deductions on Health Insurance (80D)

As a result, the Income Tax Act of 1961 lets people deduct their health insurance premiums and medical bills. The Income Tax Act of 1961 has a section called 80D that talks about how to reduce health insurance.

This document covers

1. What is Health Insurance Plan ?
2. Who can claim the deduction u/s 80D?
3. Payments qualified for deduction u/s 80D
4. Health Insurance premium paid in lumpsum
5. Amount of Deduction

1. What is Health Insurance Plan ?

• Health Insurance is a type of insurance that offers coverage to the insured individual / family for medical, surgical, prescription expenses in case of a health emergency.
• Health insurance plan (aka health insurance policy) is a plan taken by the policyholder to protect his / her family for a sum insured (total yearly benefit) with an annual health insurance premium (annual fee).
• Health insurance plans offered by companies in India provide various benefits such as cash-less claims, daily cash allowance when treated with in the networked hospitals / facilities covered by the Insurance Company, in addition to income tax benefits one may get.

2. Who can claim the deduction u/s 80D?

• Any individual or HUF who is Resident or Non-Resident can claim the deduction u/s 80D.
• 80D deduction can only be claimed under Old Tax Regime.

NOTE : Taxpayers opting for New Tax Regime cannot claim deduction u/s 80D

3. Payments qualified for deduction u/s 80D

The following payments qualify for the deduction’s u/s 80D

• In case of Individual
  1. Health Insurance paid for Family
     • Any premium paid towards the health insurance of self, spouse and dependent children.
     • Any Contribution made to Central Government Health Scheme
     • Such other health scheme notified by the Central Government
  2. Health Insurance premium for Parents
  3. Preventive Health Checkup payments for self, spouse, dependent children and parents
  4. Medical Expenditure incurred on Senior Citizens if there is no health insurance on them.
• In Case of HUF
  1. Health Insurance premium paid in respect of health of any member of the family.
  2. Medical Expenditure incurred on Senior Citizen members if there is no health insurance on them.

4. Health Insurance premium paid in lumpsum

If Health Insurance premium is paid in lumpsum for multiple years, the individual or HUF is required to take the proportion of health insurance paid for every year.

5. Amount of Deduction

1. In Case of Individual : the individual taxpayer can claim the deduction u/s 80D in respect of health insurance paid for him and family and also parents.
   • Self, Spouse and dependent children
     • Rs 25,000 against Health insurance premium paid, Contribution to CGHS and preventive Health checkup.
     • The maximum deduction that an individual can claim under preventive health checkup is Rs 5000.
     • If the individual’s age is 60 years or more and resident of India, he can claim a maximum deduction of Rs 50,000 instead of Rs 25,000. If he is NRI, the maximum deduction allowed is Rs 25,000
     • If the Individual is resident and age is 60 years or more and if he is not covered by any health insurance, he can claim the maximum medical expenditure of Rs 50,000
   • Parents
     • Rs 25,000 against Health insurance premium paid and preventive Health checkup.
     • The maximum deduction that an individual can claim under preventive health checkup is Rs 5000.
     • If the parent’s age is 60 years or more and resident of India, he can claim a maximum deduction of Rs 50,000 instead of Rs 25,000. If he is NRI, the maximum deduction allowed is Rs 25,000.
     • If the parent is resident and age is 60 years or more and if he is not covered by any health insurance, he can claim the maximum medical expenditure of Rs 50,000
2. In case of HUF
   • The maximum deduction that can be claimed against Health Insurance premium paid against any member of HUF is Rs 25,000
   • If any member is senior Citizens (aged 60 or more), the maximum deduction allowed is Rs 50,000.
   • If the member is senior citizen and there is no health insurance on them , HUF can claim the medical expenditure upto Rs 50,000