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Health Insurance Tax Benefits Under Section 80D – All You Need to Know
Section 80D of the Income Tax Act has double advantages. It provides health insurance as well as tax deductions to the person.
There is a well saying that “better to be safe than sorry”. Our government works on the same policy and to protect the health and promote the welfare being of its citizens, it encourages everyone to invest in Health Insurance Policies. In addition to this, these health insurance policies not only prevent us from unforeseeable situations (like COVID) and expenses, but also helps in saving taxes by the way of provisions of the Income Tax Act.
However, there can be cases where the person cannot afford Health Insurance policies, in that case also he can save taxes on medical expenditures. Read this blog to know more!
Provisions In Relation To Health Insurance Under Section 80D
The provisions in relation to Health Insurance under Section 80D of the Income Tax Act are:
Section | Particulars |
Section 80D | Tax deductions on medical expenditures incurred (includes premium paid for Health Insurance for self, parents, children or spouse) |
Section 80DDB | Tax deductions on expenses incurred towards the treatment of specified diseases |
Section 80DD | Tax deduction on medical treatment of a dependent who is a person with disability |
Who Can Claim Deduction?
The individuals and HUFs opting for the old tax regime can only claim a deduction under Section 80D. In other words, the deduction under Section 80D is not available under the New Tax Regime.
Further, the deduction can be claimed on the person’s total income for medical insurance premium paid and expenses incurred on health and critical illness during a financial year.
80D Under Income Tax Act
Section 80D of the Income Tax Act provides a deduction of up to ₹25,000 in respect of the premium paid towards health insurance of self, spouse and dependent children. This section further, allows a deduction of up to ₹25,000 for the premium paid towards the health insurance policy of the assessee’s parents aged below 60 years and ₹50,000, in case assessee’s parents are aged above 60 years.
Please note that it does not matter whether parents are dependent or not. Further, to claim the deduction on the premium paid towards the health insurance, the payment must be made through the bank.
Deduction in respect of preventive health check-up
Section 80D also allows a deduction of up to ₹5,000 in respect of payments made towards preventive health check-ups of self, spouse, dependent children or parents made during the previous year. Payment on account of preventive health check-ups may be made in cash. The deduction of ₹5,000 is inclusive of the overall limit of ₹25,000 or ₹50,000 as the case may be.
Maximum Limit of Deduction Amount that can be claimed under Section 80D
| SECTION 80D: Deduction on Total Income For Medical Insurance Premium Paid | |||
| Particulars | Premium Paid for Self/Spouse/Children | Premium For Paid Parents | Total Deductions |
| Individual/Spouse/Dependent Children and Parents below 60 years | Rs 25,0000 | Rs 25,0000 | Rs 50,000 |
| Individual/Spouse/Dependent Children below 60 years and Parents above 60 years | Rs 25,0000 | Rs 50,0000 | Rs 75,000 |
| Individual/Spouse/Dependent Children and Parents above 60 years | Rs 50,0000 | Rs 50,0000 | Rs 1,00,000 |
| Members of HUF below 60 years | Rs 25,0000 | Rs 25,0000 | Rs 25,000 |
| Members of HUF above 60 years | Rs 25,0000 | Rs 50,0000 | Rs 50,000 |
| Non resident individual below 60 years | Rs 25,0000 | Rs 25,0000 | Rs 25,000 |
| Non resident individual above 60 years | Rs 25,0000 | Rs 50,0000 | Rs 50,000 |
- This deduction can be claimed by individuals and HUFs opting for old tax regime.
- Preventive health check up of Rs 5,000 is inclusive in overall limits
Specified Diseases Deduction Under Section 80DDB
Section 80DDB allows a tax deduction on expenses which an individual incurs on himself or his dependent on the treatment of specified diseases as stated in the act. The amount that can be claimed as deduction is the sum actually paid or ₹40,000, whichever is lower. The maximum deduction amount in the case of a senior citizen is ₹1 lakh. The amount of deduction shall be reduced by the amount paid by an insurance company or reimbursed by the employer.
Specified diseases under Section 80DDB are:
Disease | Certificate to be taken from |
Neurological Diseases where the disability level has been certified to be of 40% and above
| Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology |
Malignant Cancers | Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology |
Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) | any specialist having a post-graduate degree in General or Internal Medicine, |
Chronic Renal failure | a Nephrologist having a Doctorate of Medicine(D.M.) degree in Nephrology |
Hematological disorders:
| a specialist having a Doctorate of Medicine (D.M.) degree in Hematology |
Disability Deduction Under Section 80DD
Sections 80DD of the Income Tax Act covers deduction for the medical treatment (including nursing), training and rehabilitation of a person with a disability. For this section, the expenditure can only be incurred dependent person with a disability. The dependent person can be the spouse, children, parents, brothers and the sisters of the assessee.
The amount of deduction that can be availed under Section 80DD is up to Rs. 75,000 for persons having a disability of more than 40% but less than 80%. In cases of severe disability (disability percentage is 80% or more), the maximum deduction that can be availed is up to Rs. 1.25 lacs.
Deduction limits under Section 80DDB and Section 80DD are as follows:
| Section 80DDB: Deduction in respect of Expenses towards Medical Treatment | |
| Particulars | Total Deductions |
| Assessee is below the age of 60 years | Rs 40,000 or the actual paid, whichever is lower |
| Assessee is above the age of 60 years | Rs 1,00,000 or the actual paid, whichever is lower |
- This deduction can be claimed by individuals and HUFs, who’re residents of India
- Deduction can be claimed on expenses for the treatment of specific diseases as stated in Income Tax Act
- Treatment can be of self, spouse, children, siblings and parents
| Section 80DD: Deduction for Medical Treatment of a dependent who is a person with disability | |
| Particulars | Total Deductions |
| Disability is more than 40% but less than 80% | Rs 75,000 |
| Disability is more than 80% | Rs 1,25,000 |
- Deduction can be claimed by resident individuals or HUFs for a dependent, who is differently abled and is wholly dependent on the individuals (or HUF) for support & maintainance.
- Deduction is allowed for a dependent of the taxpayer and not the taxpayer himself
- The taxpayer is not allowed this deduction if the dependent has claimed a deduction under section 80U for himself/herself.
Conclusion
Section 80D of the Income Tax Act covers the following deductions:
Section | Maximum Deductions for Individual/spouse/dependent children and parents below 60 years | Maximum Deductions for Individual/spouse/dependent children and parents above 60 years |
Section 80D | Rs. 25,000 | Rs. 50,000 |
Section 80DDB | Rs. 40,000 | Rs. 1,00,000 |
Section 80DD | ₹75,000 (disability is more than 40% but less than 80%) | ₹1,25,000 (disability is more than 80%) |
Please not that Section 80DD is not dependent on the age of the person.