Updated on: Jul 16th, 2023
19 min read
Health insurance provides coverage for unforeseen medical costs and hospital bills when you most require it. Unforeseen medical emergencies can arise suddenly, and the expenses may drain you financially. Health insurances are one of the best ways to overcome such financial crises.
In India, most people don't have health insurance and rely on their own savings or borrowing money when they have medical emergencies. To encourage people to purchase health insurance policies, the government introduced tax benefits under Section 80D.
Every individual or HUF can claim a deduction from their total income for medical insurance premiums paid in any given year under Section 80D. This deduction is also available for top-up health plans and critical illness plans.
The best part is that it is over and above the deductions claimed under Section 80C.
Medical insurance premiums paid for self and family and medical expenses incurred for senior citizens is allowed to the Individual or HUF category of taxpayers only.
Individual or HUF taxpayers can avail of the insurance premium payments made for:
Any other entity cannot claim this deduction. For example, a company or a firm cannot claim a deduction under this section.
An individual or HUF can claim a deduction under Section 80D for the payments mentioned below:
The deduction allowed under Section 80D is Rs 25,000 in a financial year. In the case of senior citizens, the deduction limit allowed is Rs 50,000.
The table below captures the amount of deduction available to an individual taxpayer under various scenarios:
|Policy for?||Deduction for |
self & family
|Deduction for parents||Preventive Health check-up||Maximum Deduction|
|Self & Family|
(below 60 years)
|Self & Family + Parents|
(all of them below 60 years)
|Self & Family (below 60 years) |
+ Parents (above 60 years)
|Self & Family + Parents|
(above 60 years)
|Members of HUF |
(below 60 years)
|Members of HUF |
(a member is above 60 years)
*The deduction for preventive check-up of up to Rs 5,000 will be within the overall limit of Rs 25,000/50,000. Please note that 'family' under this section includes only the spouse and dependent children.
Rohan is aged 45 years, and his father is aged 75 years. Rohan has taken medical cover for himself and his father, for which he pays insurance premiums of Rs 30,000 and Rs 35,000, respectively. What would be the maximum amount he can claim by way of a deduction under Section 80D?
Ans: Rohan can claim up to Rs 25,000 for the premium paid on his policy. As for the policy taken for his father, a senior citizen, Rohan can claim up to Rs 50,000. In the given case, the deduction allowed is Rs 25,000 and Rs 35,000. Therefore, the total deduction he can claim for the year is Rs 60,000.
The government introduced preventive health check-up deduction in 2013-14 to encourage citizens to be more proactive towards health. Preventive health check-ups aim to identify any illness and mitigate risk factors at an early stage through frequent health check-ups.
Section 80D includes a deduction of Rs 5,000 for any payments made towards preventive health check-ups. This deduction will be within the overall limit of Rs 25,000/Rs 50,000, as the case may be.
This deduction can also be claimed either by the individual for himself, his spouse, dependent children or parents. The payment for preventive health check-ups can be made in cash.
Rahul has paid a health insurance premium of Rs 23,000 for the insurance of the health of his wife and dependent children in the financial year 2022-23. He also got a health check-up done for himself and paid Rs 5,000.
Rahul can claim a maximum deduction of Rs 25,000 under Section 80D of the Income Tax Act. Rs 23,000 has been allowed towards the insurance premium paid, and Rs 2,000 has been allowed for a health check-up. The deduction towards preventive health check-ups has been restricted to Rs 2,000 as the overall deduction cannot exceed Rs 25,000 in this case.
For claiming such deduction under section 80D, the payment has to be made in the specified mode:
|Payment Purpose||Payment Mode|
|Preventive health check-up||Any mode (including cash)|
|All other cases (except check-up)||Any mode (excluding cash)|
Cash payments not allowed as deduction
For the welfare of senior citizens (Resident + aged 60 or above) who don't have health insurance, a deduction up to Rs. 50,000 can be claimed on the medical expenses incurred for them. However, if they already have health insurance and have made payments to keep it active, they won't be eligible for this deduction.
Example: If you incurred Rs 65,000 for the medical expenses of your senior parents, you may claim Rs 50,000 as deduction although they don't have a health insurance policy.
Sometimes, people buy multi-year health insurance plans because of the discounts offered. In this case, they pay the preium amount upfront. In that case, deduction is allowed proportionately under section 80D. However, this would again be subject to the limits of Rs 25,000 of Rs 50,000 as discussed above.
Example: Mr. A bought 2-year health insurance policy and paid Rs 30,000 upfront. In this case, Mr. A can claim Rs 15,000 as deduction under Section 80D in each of the two years.
There are many factors to be considered before purchasing health insurance. Here are some points to be considered from the standpoint of claiming a deduction under Section 80D and other general clauses before buying any medical insurance:
As per section 80D, a taxpayer can deduct tax on premiums paid towards medical insurance for self, spouse, parents, and dependent children. Individuals and HUF can claim this deduction. The limit of the deduction varies with age.
Maximum deduction allowed varies in different scenarios as below:
Tax deductions can be availed on individual health insurance or family floater plans. Premiums paid towards health insurance taken for self, spouse, dependent children and/or parents are allowed for deduction.
Premiums paid towards health insurance for siblings are not eligible for deduction. Premium payments made either online or offline, except cash, are allowed. Eligible online modes of payment are debit cards, credit cards and net banking.
Every individual (including non-resident individuals) and HUF can claim a deduction under Section 80D. However, the higher limit of deduction available to resident senior citizens is not available in the case of non-resident senior citizens.
The income tax department does not require submitting any document/receipt for claiming the deduction while filing ITR. However, as a matter of record and proof, it is advisable to retain the proof of payment/receipt of insurance premium in your tax file.
Yes. You can claim medical expenses for your parents when they are above 60 years within the limit of Rs 50,000. You cannot claim medical expenses deduction if your parents are below 60 years old. You need to have the bills and receipts for the expenses paid by you (in any mode other than cash) to claim the deduction.
Budget 2018 has introduced a new provision for claiming a deduction regarding single premium health insurance policies. The same is discussed above. Under the new provision, where a taxpayer has made a lumpsum premium payment in a single year for a policy valid for more than one year, he can claim a deduction equal to the appropriate fraction of the amount under Section 80D.
The appropriate fraction is arrived at by dividing the lump sum premium paid by the number of years of the policy. However, this would again be subject to the limits of Rs 25,000 of Rs 50,000, as the case may be.