Health Insurance Premiums: Are They Tax Deductible Under Section 80D?
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When you buy a health insurance policy, you're not only protecting your family against unexpected medical expenses, but also opening the door to tax benefits. Under the Income Tax Act, Section 80D allows taxpayers to claim deductions on premiums paid towards eligible health insurance plans. In simple terms, a health insurance deduction in income tax means reducing your taxable income, which directly lowers the tax you pay.
Why does this matter? Because it rewards responsible financial planning: protecting your health and reducing your tax outgo at the same time.
In the Income Tax Act 1961, section 80D specifically addresses the health insurance tax benefits. This was initiated to make people and families take medical cover and decrease the reliance on public healthcare.
Who is eligible? Individuals as well as Hindu Undivided Families (HUFs).
What qualifies? Premiums paid for:
Not everyone in your extended family is eligible under Section 80D health insurance tax benefits. Here's the exact list of members you can claim deductions for:
All healthcare-related cost is not covered under Section 80D health insurance tax benefits. The Act refers to certain eligible categories:
Section 80D health insurance tax benefits cannot be applied to cosmetic treatments, maternity expenses that are not covered by the policy, or cash payments that are made as premiums (except for preventive check-ups).
The biggest attraction of Section 80D is the deduction limits. These vary by age and relationship.
Example:
Suppose Ramesh (age 35) is a salaried professional earning ₹10,00,000 annually. He pays ₹18,000 towards his own family's health insurance premium and ₹22,000 for his parent, who are both below 60.
So, the deduction will be:
₹18,000 (self + family) + ₹22,000 (parents, non-senior) = ₹40,000.
His taxable income comes down to ₹9,60,000. Since he falls under the 20% tax slab, this health insurance deduction in income tax translates to approximately ₹8,000 in tax savings.
Before you claim, make sure you've paid correctly. Section 80D is very clear about payment modes and documentation.
At tax filing time, you simply need to mention the deduction in your ITR and retain these proofs for verification.
Since 2020, taxpayers can choose between the old tax regime (with deductions) and the new tax regime (with lower rates but no health insurance deduction in income tax).
Old Regime: Section 80D entitlements are fully available.
New Regime: No deductions under 80D are allowed.
Implication: When you have sizeable deductions (80C, 80D, home loan, etc.), the old regime tends to save more. Otherwise, the new regime may be better..
Tip: When filing, it is always good to compare both regimes to determine which regime is more tax-efficient.
To understand how the health insurance tax benefits under Section 80D actually works, let's look at a few examples with calculations.
Seema, aged 42, earns ₹12,00,000 annually. She pays ₹25,000 for her family's health insurance and ₹50,000 for her parents, who are 68 and 70.
For herself and her dependents, she can claim the full ₹25,000, and for her senior citizen parents, she can claim up to ₹50,000.
This gives her a total deduction of,
₹25,000 (self + family) + ₹50,000 (parents, senior) = ₹75,000.
But since the combined cap is ₹70,000, that's the maximum she can claim. Her taxable income comes down to ₹11,30,000. At the 30% slab, her tax saving is about ₹21,000 (30% of ₹70,000).
Let's take the case of Anil, who is 61 years old, and his wife, who is 60. Anil also supports his parents, who are aged 83 and 79. His annual income is ₹15,00,000. He pays ₹42,000 for a family floater plan covering himself and his spouse, and ₹55,000 for a separate policy for his elderly parents.
Under Section 80D:
So, the total deduction available to him is ₹92,000 (₹42,000 + ₹50,000).
This reduces his taxable income from ₹15,00,000 to ₹14,08,000. At the 30% tax slab, he saves approximately ₹27,600 in tax (30% of ₹92,000).
Choosing a policy like Manipal Cigna's family floater plans can optimise tax savings, especially when covering multiple family members under one premium.
Even small mistakes can lead to rejection of your health insurance income tax deduction claim. Watch out for:
Section 80D allows individuals and HUFs to claim deductions on health insurance premiums for self, spouse, children, and parents.
Up to ₹50,000 per year.
No, except preventive health check-ups.
Yes, up to ₹5,000 per year, included within the overall limit.
Only under the old regime. The new regime does not allow deductions.
Premium receipts, policy document, and proof of payment.
Yes, if they are health-related and not life cover riders.
Divide the premium evenly across the policy term (e.g., 3-year policy = 1/3 deduction per year).
Section 80D is one of the most valuable tax-saving tools for individuals and families. It ensures that the money you spend on health insurance premiums is rewarded with substantial tax relief. By claiming your health insurance tax benefits, you not only reduce your taxable income but also safeguard your family's health against medical inflation.
If you're planning to buy a new policy, explore ManipalCigna Health Insurance plans, which are designed to provide comprehensive protection while qualifying fully for Section 80D deductions.
