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Section 80D – Deduction for Medical Insurance

Find out more about the various aspects of tax saving under Section 80D

#Income-Tax
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Health Insurance has become crucial due to the various benefits it offers during health & medical emergencies. Not only it offers the financial coverage against medical expenses but you can also avail medical and health insurance deductions under Section 80D of Income Tax Act, 1961.

Deduction under Section 80D of Income Tax Act, 1961

The amount of tax deductions that you can claim under Section 80D depends on the number of people included under the health insurance coverage.

Thus, you can save up to Rs 25,000, Rs 50,000, Rs 75,000 or Rs 1 lakh, depending upon depending on your Covered Individuals. Here is a breakdown of the maximal tax deduction you can claim under 80D -
 

Covered Individuals

Exemption Limit

Health Check up Exemption Limit

Total Deduction under Section 80D

Self, spouse and dependent children

Rs 25,000

Rs.5,000

Rs. 25,000

For self and family including parents (all under 60 years of age)

Rs. 25,000 + Rs. 25,000

Rs.5,000

Rs. 50,000

For self, family including senior citizen parents

Rs. 25,000 + Rs.  50,000

Rs. 50,00

Rs. 75,000

For self and family members including parents (all above 60 years of age)

Rs 50,000 + Rs. 50,000

Rs. 50,000

 Rs. 1 Lakh


*Note: The maximum deduction for preventive health check-ups, of up to Rs 5,000 shall be allowed for payment made towards such health check-up of your spouse, dependent children, parents and self, under Section 80D.

What Is Covered Under Section 80D?

Section 80D offers deductions, which comprise tax saving benefits against costs incurred towards health and critical illness insurance. Under Section 80D, you can avail income tax saving benefits against healthcare-related expenses and payment of medical insurance premium for self, spouse, children and senior citizen parents.

Section 80D Max Life Insurance

What Is Covered Under Section 80D?

Section 80D offers deductions, which comprise tax saving benefits against costs incurred towards health and critical illness insurance. Under Section 80D, you can avail income tax saving benefits against healthcare-related expenses and payment of medical insurance premium for self, spouse, children and senior citizen parents.

Section 80D Max Life Insurance

Section 80D also covers payment made for preventive health check-ups, critical illness (CI) and other health-related riders provided under a life insurance policy. 

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Can Medical Expenses Be Claimed Under Section 80D?

The premiums paid towards health insurance policies for senior citizens (those ageing 60 years and above) are usually on the higher side due to several factors including age and increased affinity for health issues. At the same time, insurers may also be reluctant to provide health insurance coverage to ageing individuals and those who have any pre-existing ailments.

In 2018, the Union Budget brought some relief for senior citizens under Section 80D, who incur significant medical expenses but are unable to purchase health insurance. Possible reasons for this may include any pre-existing health conditions or an inability to afford the high premiums.

Under the Budget 2018, Section 80D was amended to allow a tax deduction for medical expenditure for senior citizens. 

This deduction can be either claimed by the individual (senior citizen) themselves or by their children on the medical bills. 

To claim deduction on medical bills, the medical expenses must be incurred on the family members who are aged 60 years and above. Also, the individual for whom medical expenditure has been incurred, and subsequently deduction under Section 80D, must not be covered under any health insurance plan.

Section 80D Max Life Insurance

Under the Budget 2018, Section 80D was amended to allow a tax deduction for medical expenditure for senior citizens. 

This deduction can be either claimed by the individual (senior citizen) themselves or by their children on the medical bills. 

To claim deduction on medical bills, the medical expenses must be incurred on the family members who are aged 60 years and above. Also, the individual for whom medical expenditure has been incurred, and subsequently deduction under Section 80D, must not be covered under any health insurance plan.

Section 80D Max Life Insurance

What is covered under Medical Expenditure?

While the Income Tax Act 1961 does not have any definitive explanation for medical expenditure, the deduction for the same was introduced under the Finance Act, 2015. The deduction was defined for super senior citizens (individuals ageing 80 years or above).

Under the Union Budget 2018, the deduction for medical expenditure for senior citizens was further increased. It was done to provide relief to senior citizens. [1]

Going by the motive, thus, expenses such as consultation fees, hearing aids and medicines, can be claimed as a deduction. Alongside Section 80D, medical expenditure on specific health ailments is also covered under Section 80DDB.

Section 80D Max Life Insurance

While the Income Tax Act 1961 does not have any definitive explanation for medical expenditure, the deduction for the same was introduced under the Finance Act, 2015. The deduction was defined for super senior citizens (individuals ageing 80 years or above).

Under the Union Budget 2018, the deduction for medical expenditure for senior citizens was further increased. It was done to provide relief to senior citizens. [1]

Going by the motive, thus, expenses such as consultation fees, hearing aids and medicines, can be claimed as a deduction. Alongside Section 80D, medical expenditure on specific health ailments is also covered under Section 80DDB.

Section 80D Max Life Insurance

Overall, you can claim a tax deduction for any medical expenses under section 80D, if:

  • The expenses must be incurred for an individual ageing 60 years or above
  • The senior citizen should not have any health insurance coverage
     

Section 80d

Section 80d

Section 80D Deduction – Eligibility Criteria

Both individuals and HUF (Hindu Undivided Family) can claim deduction under Section 80D. However,  the deduction limit under Section 80D is not definitive as that offered under Section 80C.

Instead, the deduction offered under Section 80D of the Act is flexible and allows you to include your family members, including your parents. The benefits of Section 80D deduction can help cover up to three generations of family members.

If you are an individual who has incurred the medical expense, you can claim Section 80D deduction. Thus, if you are a senior citizen and do not have any health insurance policy coverage, then you are eligible to claim income tax saving deduction yourself.

Also Read: Tips to Conside Before Buying Health Insurance

On the other hand, you can claim the deduction if you have incurred medical expenditure for your parents ageing 60 years and above in a given financial year.

If you can plan your investment well in advance, you can include your parents into this insurance fold, especially if they do not qualify for health insurance coverage or the premium payable is significantly high. 

Health Insurance Premium - Mode of Payment

The payment of premiums for any health insurance plan or medical expenditure will be possible through different methods (except for cash). Thus, you can choose from different banking channels such as net-banking, debit card and cheque. 

You can also opt for any digital channels such as UPI and mobile wallets to pay the premium. 

Payments made in cash against any medical expenditure (other than for preventive health check-up), is not eligible for this income tax saving benefit.

Moreover, the maximum deduction that you can claim against medical expenses incurred under section 80D is the same as the maximum deduction claimable for the health insurance premium. In other words, you can request a maximum deduction of Rs 1 lakh in a given financial year for the expenses incurred.

Income tax saving Max Life Insurance

You can also opt for any digital channels such as UPI and mobile wallets to pay the premium. 

Payments made in cash against any medical expenditure (other than for preventive health check-up), is not eligible for this income tax saving benefit.

Moreover, the maximum deduction that you can claim against medical expenses incurred under section 80D is the same as the maximum deduction claimable for the health insurance premium. In other words, you can request a maximum deduction of Rs 1 lakh in a given financial year for the expenses incurred.

 

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Different Scenarios to Understand Tax Saving under Section 80D

Scenario 1

Mukesh is a 46 years old executive and is covered himself, his wife and children under a health insurance policy. The annual premium payable under the policy is Rs. 18,000. Alongside, he has also spent Rs 4,000 for his family’s preventive health check-ups 

Total Tax Savings under Section 80D - Rs 22,000 

Scenario 2

Nitin is a 38-year old engineer who has to pay an annual health insurance policy premium of Rs. 12,000. The medical insurance availed covers his wife, child and himself. At the same time, he has also purchased health insurance for his parents (ageing 57 and 56 years respectively), against which he has to pay Rs 22,000 as an annual premium while incurring an expense of Rs 5,000 towards preventive health check-ups for family. 

Total Tax savings under Section 80D - Rs 47,000 (Rs 12,000 + Rs 22,000 + Rs 5,000)

Scenario 3

Vikas is a 45-year old accountant who has adequate medical insurance coverage for himself, his wife and children. The annual premium payable was Rs 27,000. Furthermore, he also pays an amount of Rs 60,000 towards his parent’s medical treatment (ageing 73 and 70), who, in turn, do not have medical insurance. 

Total Tax Savings under Section 80D - Rs 75,000 (Rs 25,000 + Rs 50,000) 

Critical Illness Coverage Under Section 80D

Medical emergencies can come unannounced in your life. The financial impact of medical emergencies, for example, a few days of hospitalization due to dengue, can end up being significantly large.

That being said, life-threatening ailments such as cardiac conditions and cancer can easily cost you several lakhs of rupees.

In the absence of health insurance coverage, you may have to pay for the expenses straight from your pocket. Health insurance plans from Max Life Insurance can help you strengthen your family’s health while availing significant tax saving benefits under Section 80D. You can pay for any unexpected accidents with your health insurance while availing considerable tax saving benefits under Section 80D. 

Health insurance

Health insurance

Frequently Asked Questions

Q. Who can claim deduction under Section 80D?

A. Any resident individual can avail Section 80D deduction against health insurance premium paid for Self, family and parents.

Q. What comes under 80D medical expenditure?

A. Section 80D of the Income Tax Act, 1961 allows you to save tax by availing health insurance. You can claim Section 80D deductions against the health insurance premium paid for self, family and parents.

Q. What is the maximum 80D Exemption Limit?

A. Individuals can claim maximum Rs.25000 every financial year as deduction under Section 80D of Income Tax Act. For Senior citizens, the 80D exemption limit is Rs.50,000. For parents (below than 60 years of age), the maximum limit is Rs.25,000 for health insurance premium paid. For parents (60 years or more), the maximum limit is Rs. 50,000 for health insurance premium paid.

Sources:

[1] https://www.indiabudget.gov.in/budget2018-2019/ub2018-19/bs/bs.pdf

https://www.incometaxindia.gov.in/Pages/tools/deduction-under-section-80d.aspx

https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

https://taxguru.in/income-tax/deduction-section-80d-income-tax-act.html 

Disclaimer:

Save 46800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are:

  • Regular Individual
  • Fall under 30% income tax slab having taxable income less than Rs. 50 lakh
  • Opt for Old tax regime

ARN:- Sep/Bg/04I

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