Health insurance has become crucial in today’s world. With rising cases of medical ailments, it has become difficult to manage without one. The advancement in medicine has increased the life expectancy for sure but it is also seen to increase the cost of treatments. Health insurance is an investment to protect your other investments from getting liquidate for repaying medical expenses. Not only that, health insurance premiums also help to save taxes in your return of income. Let us look at the deductions you can avail in respect of health insurance premiums paid under the Income Tax Act, 1961.
Section 80D: Deduction for health insurance premiums
Section 80D specifies a deduction for the premiums paid for availing health insurance coverage. All health insurance plans qualify for a deduction if the payment is made by any mode other than cash, i.e. bank transfer, debit or credit card or even UPI and e-wallets. The amount of deduction differs for different age groups wherein the premium paid for folks other than senior citizens are eligible for a deduction up to ₹25,000. For senior citizen beneficiaries, this amount of deduction is allowable up to ₹50,000. The Income Tax Act classifies a person above 60 years to be a senior citizen. So, premium paid for yourself, your spouse or your children, where even one of the beneficiaries is above 60 years, becomes eligible for a deduction of ₹50,000. The same in the case of health insurance for parents.
The following table summarises the above explanation –
| Scenario | Premium for and the maximum deduction that can be availed | Total deduction under section 80D | |
| For policyholder, their spouse, and their dependent children | For parents, whether they are dependent or not | ||
| All Beneficiaries are not senior citizens | Up to ₹ 25,000 | Up to ₹ 25,000 | ₹ 50,000 |
| The policyholder and other family members are below 60 years and Parents are over the age of 60 years |
Up to ₹ 25,000 | Up to ₹ 50,000 | ₹ 75,000 |
| Either the policyholder or any other family member has crossed the age of 60 and Parents are also above the age of 60 years |
Up to ₹ 50,000 | Up to ₹ 50,000 | ₹ 1,00,000 |
Apart from availing deduction for premium paid, be it individual plan, family health insurance plan or any other, a deduction for preventive health check-up up to ₹5,000 is available as an internal sub-limit in the above amounts.
Section 80DDB: Deduction for medical treatment of specified diseases
Apart from section 80D, section 80DDB also allows for a deduction for treatment availed for specified list of diseases. The ailments are specified by the tax laws include neurological diseases, malignant cancers, full blown acquired immuno-deficiency syndrome, chronic renal failure and hematological disorders. Here the treatment need not be only by way of a health insurance policy but can also be otherwise. The amount of deduction is ₹40,000 whereas the same amount is increased up to ₹1,00,000 for senior citizens.
Section 80DD: Deduction for medical treatment of a dependent who is a person with disability
This section allows a deduction of up to ₹75,000 can be availed for treatment of a dependent with disability. The dependent can include spouse, children, parents, brother and sister of the assessee. This amount of deductions extends up to ₹1,25,000 for a severe disability wherein the disability is above 80%.
Now that you know what is health insurance, why is it essential and the tax benefit it offers, make sure to purchase the right health cover to ensure complete financial safety for you and your family.