Insuring health comes with a distinct advantage of tax benefit. Premium paid on health insurance policy is tax-deductible under section 80D of the Income Tax Act, 1961.
The current law states that an individual or Hindu Undivided Family (HUF) can claim deduction for premium paid on medical insurance policy. Read on to know more.
What is section 80D?
Section 80D of the Income Tax Act allows taxpayers to claim deductions on premiums paid for medical insurance. This benefit applies to policies covering oneself, family members, and dependent parents. The deduction helps reduce taxable income, making health insurance a smart financial and health investment.
What are the tax benefits of health insurance?
Financially safeguarding policy takers from sudden medical emergencies and tax saving. With increase in limits of deduction under section 80D from the year 2015-16, policy takers will benefit with increased tax savings.
Tax benefits of medical insurance include:
- Deductions on premiums paid for self, spouse, children, and parents.
- Additional deductions for senior citizens.
- Preventive health check-up expenses are included under Section 80D.
- Savings on taxable income, reducing overall tax liability.
How much health insurance tax benefit under section 80D can be claimed by you?
Section 80D provides tax relief based on who is covered under the medical insurance policy. Individuals can claim deductions for premiums paid for:
- Self, spouse, and dependent children – Up to ₹25,000 per year.
- Parents below 60 years – Additional ₹25,000 deduction.
- Parents above 60 years – Additional ₹50,000 deduction.
- HUF and non-resident individuals (NRIs) – Eligible for deductions under this section.
Health insurance tax benefits on multi-year policies
If you purchase a medical insurance policy for multiple years, the premium can still be claimed as a tax deduction. The total premium amount is equally divided across the policy tenure, and deductions can be claimed accordingly.
For example, if you pay ₹60,000 for a three-year policy, you can claim ₹20,000 per year under Section 80D.
Factors to be considered while finalising a health insurance plan
When choosing health insurance, consider the following factors:
- Coverage amount – Ensure that the sum insured is adequate for medical emergencies.
- Inclusions and exclusions – Read and carefully understand what is included and what is not.
- Cashless network hospitals – Check if your preferred hospitals are included.
- Waiting period – Consider pre-existing disease coverage timelines.
- Premium costs – Balance affordability with benefits.
Choosing the right policy, especially for medical insurance for parents, is crucial to securing quality healthcare while maximising tax benefits.
What documents do I require to claim medical insurance tax benefits under section 80D?
To claim tax deductions, you must provide:
- Premium payment receipt – Proof of premium payment.
- Policy document – Mentioning the insured individuals.
- Bank or credit card statement – Proof of payment.
- PAN or Aadhaar details – For verification during tax filing.
Conclusion
Investing in medical insurance offers dual benefits—financial protection and tax savings. With Section 80D deductions, individuals can reduce their taxable income while ensuring healthcare security for themselves and their loved ones. Whether purchasing a policy for yourself or opting for medical insurance for parents, it’s important to understand these tax benefits and choose the right plan that provides comprehensive coverage while optimising savings.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis, or treatment. Please consult your general physician or another certified medical professional for any questions regarding a medical condition. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.