Besides providing a financial cushion for expenses you incur prior to, during, and after a hospitalization, health insurance also provides tax benefits on the premium amount you pay. Yes, you read that right. The health insurance premiums you pay every year are tax-deductible under Section 80D of the Income Tax Act of India, up to specific limits. 

Let’s learn about these limits in detail in this article. 

Who Is Eligible For Health Insurance Tax Benefits u/s 80D?

If you’re an individual or a member of the Hindu Undivided Family (HUF), you can get tax deductions for premiums paid towards health insurance under Section 80D of the Income Tax Act for - 

• Yourself
• Spouse
• Dependent children
• Dependent parents

How Much Tax Deduction Can You Get u/s 80D?

The maximum deductions you can claim under Section 80D of the Income Tax Act depend on your and your family members' age. Here’s how much tax saving you can do through health insurance policies purchased for -

Individuals & Parents below 60 years

In case everyone in your family is below the age of 60 years, you can get a tax deduction up to INR 50,000 in total. 

• Deduction up to INR 25,000 for you, your spouse, and your children.
• Deduction up to INR 25,000 for your parents, who are below 60 years.

Individuals below 60 years & Parents above 60 years

If you, your spouse, and your children are below 60 years and your parents are above 60 years, the tax-deductible limit will be up to INR 75,000.

• Deduction up to INR 25,000 for you, your spouse, and your children.
• Deduction up to INR 50,000 for your parents.

Individuals & Parents above 60 years

If you, your wife, and your parents are above the age of 60 years, you can claim a tax deduction up to INR 1,00,000.

• Deduction up to INR 50,000 for you, your spouse, and your children.
• Deduction up to INR 50,000 for your parents.

Members of HUF

HUF or a Hindu Undivided Family consists of males descended from a common ancestor, their wives, and unmarried daughters. A maximum of INR 25,000 tax deduction can be claimed for a health insurance policy taken for any members of the HUF - if their age is below 60 years. For members above 60 years of age, a tax deduction of up to INR 50,000 can be claimed.

Non-resident Individuals

NRIs (Non-resident Individuals) who’ve purchased a health insurance policy in India can get a tax deduction of up to INR 25,000 for self, spouse, and dependent children. An additional deduction of INR 25,000 can be claimed for health insurance premiums paid for parents aged up to 60 years. And for parents who are above 60 years, a maximum deduction of INR 50,000 can be claimed.

Deduction For Preventive Health Check-up u/s 80D

Under Section 80D, you can also claim tax deductions for any payment you've made towards preventive health check-ups done to identify any illness or disease. You can get a tax deduction of up to INR 5000 and this deduction can be availed even if the payment for the preventive health check-up is made in cash.

Important Things You Should Note 

Here’s a list of things you should be aware of while applying for tax exemptions under the Income Tax Act - 

• These tax benefits can be claimed only if you buy the insurance policy from a company that is authorized by the Insurance Regulatory & Development Authority of India (IRDAI) or the Central Government.
• The health insurance premiums you pay to the insurance company including taxes will be allowed as a deduction.
• Tax exemption will be applicable only if the premium payments you make are for your immediate relatives like your spouse, children, and parents.
• To get the tax benefits, it is mandatory that you pay the premiums via your bank, credit/debit cards, cheque, demand draft, etc. Cash payment will not be considered for tax exemptions under section 80D - except for preventive health check-ups. 
• If you’re covered under a corporate health insurance policy, you won’t be eligible for tax exemption unless you’re paying the premiums - either partially or fully. In this case, you can claim tax deductions up to INR 1 Lakh under Section 80D in a financial year.

If you have any further questions related to health insurance tax benefits, you can post them on the Beshak Insurance Forum & get answers from insurance experts