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  • Writer's pictureRajat Chauhan

Health Insurance Tax Benefits: What Every Taxpayer Needs to Know


Health insurance is not only a necessary tool for managing health costs but also a wise and smart approach to getting tax benefits. In India, there is a specific Section 80D of the Income Tax Act of 1961 that provides significant health insurance tax benefits to those who invest in medical insurance for themselves and their families. Let’s first understand Section 80D in detail to gain insights on how to maximise tax savings through medical insurance premiums and health check-ups.


What is Section 80D of the Income Tax Act?


Section 80D of the Income Tax Act is related to the tax benefits for the expenses incurred on health insurance policies and preventive treatments. It enables you to claim deductions on the premium amount paid for health insurance policies, for up to ₹ 25,000 for yourself and ₹ 50,000 for senior citizens on health insurance premiums, preventive medical check-ups and other medical expenses. The concept is to persuade people to secure themselves and their family members from financial losses due to unpredictable medical expenses.


Tax Deductions Under Section 80D


Breakdown of the tax deductions available under Section 80D:

Category

Insured Individuals

Deductions Available

Individuals and Families

Self, Spouse, Dependent Children

Up to ₹ 25,000

Parents (Below 60 Years)

Parents below 60 years of age

Up to ₹ 25,000

Senior Citizen Parents

Parents aged 60 years and above

Up to ₹ 50,000

Hindu Undivided Families (HUFs)

Members of HUF, including the breadwinner, spouse, dependent children and parents

Up to ₹ 50,000 for senior citizens

Types of Health Insurance Plans Allowed Under Section 80D


  1. Individual Health Insurance


This type of plan is for individuals, which means that it is issued for only one person – usually the policyholder. The premium paid for an individual health insurance policy is allowed under Section 80D.


2. Family Floater Health Insurance


A family floater policy is one where all the members of the family are covered under a single policy. The sum assured can be used by any family member in case of an illness or disease. Premiums paid towards family floater policies are also allowed as a deduction.


For instance, let’s assume that you have a family floater health insurance policy that includes you, your spouse and your two children. The premium paid for this policy is also allowed as a deduction under Section 80D of the Income Tax Act. 


3. Senior Citizen Health Insurance


These plans are available for people of 60 years and above (senior citizens). Expenses incurred towards the premium of health insurance policies for senior citizens are allowed for higher deductions under Section 80D.


4. Critical Illness Insurance


Critical illness plans offer benefits for certain critical conditions that can lead to death. Even the amount spent on premiums for critical illness insurance is allowed as a deduction under Section 80D.


How to Claim Tax Benefits Under Section 80D?


To claim health insurance tax benefit, follow these steps when filing your Income Tax Returns (ITR) for the said financial year:


  1. Select 80D Deduction: While filing your ITR, under the ‘Deductions’ column, look for Section 80D, which allows you to claim tax deductions on medical insurance premiums.


2. Choose the Criteria: Select the basis for taking the deduction under the following criteria. Here are the options:

  • Self and family

  • Self (above 60 years) and family 

  • Self + parents

  • Parents (above 60 years)

  • Self, family and parents 

  • Self, family and parents above 60 years of age

  • Self (above 60 years), family and parents above 60 years


3. Attach Supporting Documents: Provide relevant documents like the receipt of the premium payment for the Income Tax Department to assess.


Health Insurance & Tax Benefit Under Section 80D


  1. Tax Savings: It is not only a smart decision to buy health insurance but also an intelligent financial investment. Health insurance tax benefit helps you save more money as you can claim tax deductions under section 80D. 

  2. Financial Security: Health insurance is a financial service that ensures individuals that their health care expenses will be covered, which minimises the portion of cost borne by the individual. Health insurance protects during medical emergencies as the policyholder does not have to pay the medical cost incurred from his/her own pocket. 

  3. Comprehensive Coverage: Health insurance policies provide extensive coverage that encompasses various aspects of medical treatment. These policies encompass nearly all aspects of health care, from hospitalisation expenses to pre- and post-hospitalisation expenses and even annual health check-ups.

  4. Higher Deductions for Senior Citizens: Elderly people have special health needs and may require the services of a doctor more often. Fortunately, the upper limit for deduction under Section 80D for senior citizens is higher, and thus, it is possible for families to secure adequate health insurance for their elderly members.

  5. Peace of Mind: The final and perhaps the most important is the psychological effect that people feel when they have health insurance. Since you and your family members do not have to worry about the costs of medical treatments, you can focus on what matters most – your health.


Conclusion


Health insurance provides both tax benefits and financial stability. It is a simple and smart way to protect your insurance premiums and claim the maximum tax deductions under Section 80D of the Income Tax Act. Explore comprehensive health insurance tax benefit plans with ACKO for reliable coverage and simpler claim processing. Secure your health and financial future today!



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