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Health Insurance Tax Benefits

Extensive coverage for you and your family

Covers pre- and post-hospitalisation expenses

Protects against high medical costs

0% GST on health insurance ^AO

Health Insurance Tax Benefits Under Section 126 (formerly Section 80D)

Health insurance is an investment in your future in more ways than one. Did you know a policy can help reduce your tax liability?

Under Section 126 of the Income Tax Act 2025, you can enjoy tax benefits on the premium you pay towards a health insurance policy (for you and your family). You can claim a Section 126 deduction of up to ₹25,000 for yourself and your family, ₹75,000 if your parents are senior citizens, or ₹1,00,000 if both you and your parents are above 60.

If you’re protected by a policy or have recently purchased one, this is your sign to avail of health insurance tax benefits.

What is Section 126 in Health Insurance?

Section 126 is a provision under the Income Tax Act,2025 that allows individual taxpayers and Hindu Undivided Families (HUFs) to reduce their taxable income by claiming a deduction on health-related expenses during a financial year. It was formerly known as Section 80D.

Who can be covered

Self, spouse, dependent children, and parents (whether dependent or not).

What qualifies

Health insurance premiums, top-up premiums, critical illness rider premiums, and preventive health check-up expenses.

What does not qualify

Premiums paid in cash (except for preventive health check-ups), premiums for siblings, grandparents, in-laws, or working children.

You don’t want to miss out on some valuable tax savings when filing your next return. When you claim a deduction under Section 126, it means you’re reducing your tax liability. Make sure you understand the provisions of Section 126 and what’s covered!

Section 126 Deduction Limits for FY 2026-27

Scenario	Deduction for Self, Spouse & Children	Deduction for Parents	Maximum Deduction Under Section 126
You and your parents are all below 60 years	₹25,000	₹25,000	₹50,000
You are below 60; parents are 60 or above	₹25,000	₹50,000	₹75,000
You are 60 or above; parents are 60 or above	₹50,000	₹50,000	₹1,00,000

Note: A deduction of up to ₹5,000 for preventive health check-ups is incorporated within the overall limits shown above, not in addition to it.

A deduction of up to ₹5,000 for preventive health check-ups is incorporated within the overall limits shown above, not in addition to it.

What Expenses Are Covered Under Section 126?

The Section 126 deduction list is comprehensive, which is exactly why it’s such a valuable provision to keep track of. Here is what qualifies for deduction:

Health insurance premiums

Premiums paid for policies covering self, spouse, dependent children, and parents. This includes base health insurance policies, top-up plans, and critical illness plans.
Critical illness rider premiums

If your policy includes a critical illness add-on, the premium paid for that rider also qualifies for deduction.
Preventive health check-ups

Up to ₹5,000 per year for check-ups covering blood pressure, blood sugar, cholesterol, cancer screenings, and physical examinations. Payment in cash is permitted for this category.
Medical expenses for senior citizens

If a senior citizen (aged 60 or above) does not have a health insurance policy, the medical expenses incurred for their treatment can be claimed as a deduction, up to ₹50,000.
Multi-year premiums

If you pay a lump sum premium for a multi-year policy, the deduction is claimed proportionately across the policy years.

Eligibility Criteria for Claiming 126 Deduction

Before claiming a deduction under Section 126, make sure you meet the following eligibility conditions.

1
Individual taxpayers: Any individual can claim the 126 deduction on premiums paid for themselves, their spouse, and dependent children.
2
HUFs: HUF members can claim deductions on premiums paid for any member of the family.
3
Parents: Premiums paid for parents, whether financially dependent or independent, are eligible.
4
Dependent children only: Premiums paid for financially dependent children qualify for tax deductions. Independent, working children are excluded.
5
Exclusions: In-laws, siblings, grandparents, and other relatives fall outside the scope of the Section 126 deduction.

Mode of Payment to Claim 126 Deduction

The rules of Sec. 126 are specific about how premiums must be paid for the deduction to apply.

Premiums must be paid via cheque, demand draft, net banking, debit card, or credit card. Cash payments for health insurance premiums do not qualify for deduction.
Only preventive health check-up expenses of up to ₹5,000 can be paid in cash and still claimed as a deduction.
Naturally, the premium must be paid by the individual actually claiming the deduction. Payments made by a third party on your behalf are not eligible.

Example of Section 126 Deduction Calculation

Here is a practical illustration of how the Section 126 deduction works for a taxpayer with both a self-and-family policy and a parent policy.

Scenario	Details	Premium: Self + Family	Premium: Parents	Deduction Claimed
A	Arjun (29), wife, one child; both parents below 60. Pays ₹14,000 towards his family policy + ₹3,000 on preventive health check-ups. Pays ₹20,000 for parents' policy.	₹14,000 + ₹3,000 = ₹17,000	₹20,000	₹37,000
B	Deepa (44), husband; father (66), mother (59). Pays ₹25,000 for her family policy. Pays ₹48,000 for her parents' policy. Father is a senior citizen, so the ₹50,000 cap applies.	₹25,000	₹48,000	₹73,000

Note: These are only illustrative examples. deductions depend on premiums paid and the limits applicable for the relevant financial year.

Section 126 in New Tax Regime vs Old Tax Regime

With the New Tax Regime, several deductions are no longer applicable, including the tax deductions under 126. Here’s what’s changed:

Feature	Old Tax Regime	New Tax Regime
Section 126 deduction	Yes	No
Premium deduction for self and family	Up to ₹25,000 / ₹50,000	Not applicable
Premium deduction for parents	Up to ₹25,000 / ₹50,000	Not applicable
Preventive health check-up deduction	Up to ₹5,000 (within overall limit)	Not applicable
Tax rates	Higher slab rates	Lower slab rates, but fewer deductions
Best suited for	Taxpayers with significant expenditure on health insurance	Taxpayers with minimal deductions and investments

Under the new tax regime (which became the default regime from FY 2023-24), most deductions, including Section 126, are not available. Fortunately, this does not mean that you cannot benefit from the deductions at all. Taxpayers who wish to claim 126 income tax deductions must simply opt for the old tax regime when filing their return.

ICICI Lombard Policies

Protecting you and your family should not feel like an additional financial burden. ICICI Lombard's health insurance policies are built to deliver both health cover and tax savings. With options across individual plans, family floater policies, and senior citizen covers, you can structure your coverage to maximise the health insurance tax benefit available under Section 126, up to ₹1,00,000, depending on your family's age profile.

The benefits extend into the features of these policies. Cashless hospitalisation, wellness rewards, and a wide network of hospitals make health insurance a financially practical choice beyond just the tax angle.

The deduction is only available if you have opted Old tax regime

Things to Keep in Mind While Claiming 126 Deduction

Here are a few important reminders before you file for a deduction under Section 126:

Family Policies Count Too

Health insurance tax benefits are not just for individual policies. A family floater policy covering your spouse, children, and dependent parents makes you eligible for deductions under Section 126, so the whole family being on one policy does not mean you lose out on tax savings.

Pay Right, or the Deduction Does Not Apply

Cash payments for health insurance premiums are not eligible for deduction under Section 126. All other modes, including cheque, demand draft, net banking, and debit or credit cards, are accepted. Importantly, the premium must be paid by the taxpayer claiming the deduction. If someone else pays it on your behalf, neither party can claim the benefit.

How to Claim Deduction Under Section 126?

You can easily claim a deduction under Section 126 as part of your Income Tax filing process under Old Regime.

Naturally, you need a qualifying health insurance policy first! The policy must cover self, spouse, dependent children, or parents and be issued by a recognised insurer.

Pay the premium (make sure it’s via a non-cash mode):

Use net banking, card, cheque, or demand draft to ensure eligibility.

Keep all documents

Retain your premium payment receipts, the policy certificate, and any preventive health check-up bills.

If your employer or tax authorities ask for documentation, keep premium receipts and the policy document with you as supporting evidence.

Why Health Insurance Is Important Beyond Tax Savings

With health insurance tax benefit under Section 126, choosing health insurance becomes an easy ‘yes.’ However, to truly safeguard your future (and that of your family), you need to think beyond the obvious.

Financial protection

Covers hospitalisation, surgery, and treatment costs so your savings stay intact.

Rising medical costs

Healthcare costs continue to rise each year, and a health insurance policy ensures you are not at risk if emergency strikes.

Comprehensive coverage

Modern policies cover a wide range of conditions and treatments.

Cashless treatment

Access to a large hospital network means you can receive treatment without arranging funds upfront.

Family security

A single family floater policy extends financial protection to your entire household under one cover.

Peace of mind

Perhaps the most important benefit is knowing that a medical emergency will not affect your financial stability.

Health Insurance Blogs

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This blog explains key signs of a healthy heart, such as normal heart rate, blood pressure, stamina, cholesterol levels, and good exercise recovery. It also highlights lifestyle habits that support heart health and why recognising these signs matters for long-term health insurance planning.

06 Aug 2026

Different Types of Departments in a Hospital

This blog explains the different types of hospital departments—clinical, diagnostic, and non‑clinical—helping readers understand how each unit functions and supports patient care, making hospital visits easier to navigate.

29 Jul 2026

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FAQs On Section 126 (Formerly Section 80D)

What is the maximum deduction under Section 126?

Section 126 permits deductions up to ₹25,000 for premiums paid for self, spouse, and children, plus ₹25,000 for parents, and ₹50,000 for senior citizens (60+), allowing a total maximum deduction of ₹1,00,000.

Can I claim section 126 deductions in new tax regime?

No, you cannot claim section 126 deductions in the new tax regime.

Can I pay premium in cash?

No, use net banking, card, cheque, or demand draft to pay premium.

Can I claim ₹75,000 under Section126?

Yes, you can claim up to ₹75,000 under Section 126 if you are paying premiums for yourself (under 60) and for parents who are above 60 years of age.

Please note that tax deductions for Health Insurance is only applicable if you have opted for Old Regime

Got questions? Let's talk! Share your contact details and we'll give you a call.

Thank You for your interest in our product.

Health Insurance Tax Benefits

Health Insurance Tax Benefits Under Section 126 (formerly Section 80D)

What is Section 126 in Health Insurance?

Who can be covered

What qualifies

What does not qualify

Section 126 Deduction Limits for FY 2026-27

What Expenses Are Covered Under Section 126?

Health insurance premiums

Critical illness rider premiums

Preventive health check-ups

Medical expenses for senior citizens

Multi-year premiums

Eligibility Criteria for Claiming 126 Deduction

Mode of Payment to Claim 126 Deduction

Example of Section 126 Deduction Calculation

Section 126 in New Tax Regime vs Old Tax Regime

ICICI Lombard Policies

Things to Keep in Mind While Claiming 126 Deduction

Family Policies Count Too

Pay Right, or the Deduction Does Not Apply

How to Claim Deduction Under Section 126?

Pay the premium (make sure it’s via a non-cash mode):

Keep all documents

Why Health Insurance Is Important Beyond Tax Savings

Financial protection

Rising medical costs

Comprehensive coverage

Cashless treatment

Family security

Peace of mind

Health Insurance Blogs

Balance Exercises for Seniors to Improve Stability

What Are the Signs of a Healthy Heart?

Different Types of Departments in a Hospital

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