Section 80D - Benefits & Deductions on Health Insurance

What is Section 80D of the Income Tax Act?

Section 80D of the Income Tax Act, 1961 allows you to get a tax deduction of up to Rs 25,000 for health insurance premiums you pay in a year. If you are a senior citizen (aged 60 or above), this limit goes up to Rs 50,000 per year. You can claim this deduction for health insurance policies you buy for yourself, your spouse, children, and parents.

The tax deductions under Section 80D are separate from those you can claim under Section 80C.

Who Can Claim Tax Deductions Under Section 80D?

Individual taxpayers and Hindu Undivided Family (HUF) are the only entities who are entitled to avail deductions under Section 80D of the Income Tax Act. In order to determine how much you can save you can use an income tax calculator. It is hereby clear that partnership firms, trusts, companies, or other forms of organizations shall not be allowed to claim deductions under this section. Only payments made for health insurance premiums and healthcare costs for senior citizens are eligible.

Tax Deductions Under Section 80D

Here are the tax deductions available for an individual under Section 80D of the Income Tax 2023-2024:

Tax Deductions for Health Insurance Premiums Paid for Parents (Section 80D)

You can claim extra tax deductions for paying health insurance premiums for your parents. The amount you can claim is higher if your parents are senior citizens.

• 1. If your parents are under 60 years old, you can claim a deduction of up to Rs. 25,000.
• 2. If one or both of your parents are senior citizens (aged above 60), you can claim a deduction of up to Rs. 50,000.

You can claim these deductions when you file your income tax return (ITR) online, based on your income tax slab.

Section 80D Tax Deductions for HUFs

Under Section 80D of the Income Tax Act, tax deductions on health insurance premiums are available to any member of the HUF. Just like an individual taxpayer, members of HUFs can claim tax deductions of up to Rs. 25,000 if their age is below 60 years. In case the HUF member is a senior citizen, a tax deduction of 50,000 is available.

Benefits of Section 80D for Health Insurance

Here are some key benefits of having a health insurance plan under Section 80D:

1. Tax Deduction

You can get a tax deduction on the amount you pay for health insurance premiums for yourself or your family. The maximum deduction is Rs. 25,000 if you are under 60 years old, and Rs. 50,000 if you are 60 or older.

2. Preventive Health Check-up Cover

You can also claim a deduction for expenses on preventive health check-ups. This helps catch health issues early before they become serious.

3. Additional Deductions for Parents

No matter their age, you can claim extra deductions for health insurance premiums you pay for your parents.

4. Pre-existing Diseases Cover

If you have insurance for any pre-existing conditions and pay premiums for them, you can also claim a deduction under Section 80D.

5. Critical Illness Cover

Many health insurance plans cover critical illnesses like cancer, heart attack, and stroke. You can claim a deduction for the extra premium you pay for this coverage.

What are Preventive Health Check-ups Under Section 80D?

Preventive health check-ups are regular medical tests to catch any illnesses early and reduce health risks. The government introduced tax deductions for these check-ups in FY 2013-14 to encourage people to take care of their health. You can claim this tax deduction for check-ups done for yourself, your spouse, children, and parents.

Under Section 80D, you can get a tax deduction of up to Rs. 5,000 per year for preventive health check-ups. However, this amount is included in the total Section 80D limit of Rs. 25,000 for people under 60 and Rs. 50,000 for senior citizens.

Modes of Payment for Section 80D Deductions

Here are the payment modes that are available in Section 80D deductions:

Tax Deduction for Multi-year Health Insurance Paid in One Payment (Section 80D)

Many people buy health insurance for multiple years to get a discount from insurance companies. If you pay for your multi-year health insurance in one lump sum (all at once), you can still get tax deductions for each year under Section 80D.

Just like with one-year policies, the total tax deductions for multi-year health insurance premiums are limited to Rs. 25,000 for individuals under 60 years and Rs. 50,000 for senior citizens.

Tax Deduction for Treatment of a Dependent with Disability (Section 80DD)

Under Section 80DD you are eligible to claim tax benefits for treatment expenses you pay for the dependent suffering from disability. You can claim up to Rs. 75,000 per year. If the disability is of severe level (80% or more) then you may avail maximum pay of Rs. 1,25,000 per year. Dependents can include your spouse, children, parents, or siblings.

Also, you are eligible for tax deduction in case you pay insurance premiums (e.g., annuity or lump sum) of LIC or any other insurer for the purpose of managing the sick dependent having a disability.

The deduction covers medical treatment, nursing, training, and rehabilitation expenses for the dependent. In order to get this benefit, you must provide a disability certificate from a government medical board when you file your taxes.

Tax Deduction for Treatment of Specific Illnesses (Section 80DDB)

Under Section 80DDB, you can claim a tax deduction of up to Rs. 40,000 per year for medical expenses related to certain serious illnesses, such as chronic kidney failure, cancer, Parkinson’s disease, dementia, and HIV/AIDS.

For senior citizens with any of these illnesses, the deduction can go up to Rs. 1 lakh per year.

What is Not Covered Under Section 80D?

Here are some things that are not allowed under Section 80D of the Income Tax Act:

• 1. You cannot claim deductions for health insurance premiums paid in cash.
• 2. If both you and your parents pay part of the medical insurance premiums, both of you can claim deductions for the amounts you paid.
• 3. Premiums paid for siblings, grandparents, uncles, and aunts do not qualify for deductions.
• 4. Premiums paid for working children are not eligible for deductions.
• 5. Group health insurance premiums paid by your employer are not eligible for deductions under Section 80D.
• 6. You cannot claim deductions for service tax or cess added to health insurance premiums.

Conclusion

Section 80D of the Income Tax Act offers a great opportunity to reduce your taxable income by providing tax deductions for health insurance premiums. Whether you are insuring yourself, your spouse, children, or parents, this section allows you to claim deductions up to Rs. 25,000 (Rs. 50,000 for senior citizens). By taking advantage of this benefit, you can save on taxes while securing the health and well-being of your loved ones. Be sure to keep track of your health insurance premiums and make the most of these valuable deductions.