How To Save Tax With Health Insurance?

Health insurance has covered you for taxes as well!

Yes, that's correct. Besides providing financial protection against hospitalisation costs, a health insurance policy also offers tax advantages. Section 80D of the Income Tax Act of 1961 allows you to claim tax deductions on the health insurance premiums you pay every year. And, the deductions can be availed for health insurance cover bought for yourself, your spouse, dependent children, and your parents.

But, how much tax deduction can you claim under Section 80D?

Let’s find out!

Tax Deduction Limits Under Section 80D

The maximum deduction you can claim under Section 80D will vary depending on your as well as your family members' age -

  • If You And Your Parents Are Below 60 Years

    You can claim a deduction of up to -

    Rs. 25,000 for yourself, your spouse, and your children.

    Rs. 25,000 for your parents.

    So, a maximum deduction of up to Rs. 50,000 can be claimed if all your family members are below 60 years.

  • If You Are Below 60 Years And Your Parents Are Above 60 Years

    You can apply for a deduction of up to

    Rs. 25,000 for yourself, your spouse, and your children.

    Rs. 50,000 for your parents.

    Thus, you can avail a maximum tax deduction of up to INR 75,000.

  • If You And Your Parents Are Above 60 Years

    In this case, you can get a deduction of up to -

    Rs. 50,000 for yourself, your spouse, and your children.

    Rs. 50,000 for your parents.

    You can, thus, get a maximum deduction of up to Rs. 1,00,000 if you and your parents are above the age of 60.

  • If You Are A Member Of HUF

    The Hindu Undivided Family (HUF) can be described as a family that consists of a common ancestor and all his lineal male descendants, their wives, and unmarried daughters. Here, tax deductions can be claimed up to -

    Rs. 25,000 for health insurance premiums paid for HUF members who are below the age of 60.

    Rs. 50,000 for health insurance premiums paid for HUF members who are over the age of 60.

  • If You Are A Non-Resident Indian

    If you are a Non-resident Indian (NRI) and have purchased a health insurance plan in India, you can claim a deduction of up to Rs. 25,000 for yourself, your spouse, and dependent children. You can also get an additional deduction of up to -

    Rs. 25,000 for parents under the age of 60.

    Rs. 50,000 for parents above the age of 60.

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Calculate Your Health Insurance Premium

Some Important Things You Must Be Aware Of

  • The Deduction Can Be Availed On The Gross Premium

    Tax deductions under Section 80D can be claimed on health insurance premiums paid in full, including taxes.

  • The Policy Should Be Purchased From An Authorised Company

    Tax deductions can only be availed for health insurance policies purchased from a company that is authorised by the Central Government or the IRDAI (Insurance Regulatory & Development Authority of India).

  • Deduction Can’t Be Availed On Premiums Paid Through Cash

    You can claim tax deductions only if you pay the premiums via your bank, credit/debit card, cheque, demand draft, etc. You can't get tax deductions if the premium payment is done in cash - except for preventive health check-ups.

  • Tax Deduction For Preventive Health Checkups

    You can also get deductions for payments made towards preventive health checkups. You can claim a maximum tax deduction of up to Rs. 5000. And, you can get this deduction even if you’ve made the payment for the preventive health checkup in cash.

  • Tax Deductions In Case You Have A Corporate Health Insurance Plan

    If you’re covered under your employer's plan, you can't claim tax deductions under Section 80D. However, if you’re making a partial or full premium payment, you can claim tax deductions of up to Rs. 1,00,000.

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So, that is all about tax deductions under Section 80D of the Income Tax Act, 1961. Ensure you’re aware of the limits as well as the things we’ve mentioned above - to avoid any difficulties while claiming the deductions.

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