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Section 80D – Get Tax Benefits on Health & Medical Insurance

Section 80D Tax Benefits
  • Author

    MintWise

  • Date

    November 3, 2016

Section 80D offers one of the best tax-saving benefits in India, which specifically provides deduction in taxable income to the extent of premiums paid on purchase of health insurance or medical insurance / mediclaim products. A really wonderful feature of this deduction is that it even includes the premiums that you pay for the health insurance of your parents, children and other family members. Not just that, tax benefit under Section 80D is over and above benefits under other sections such as 80C, 80CCC, 80CCD, 80CCD2, etc. Not using the benefit from Section 80D would be foolish since besides losing the tax benefit, it also means that you do not have any health insurance or medical insurance / mediclaim. The benefit from Section 80D can be as high as Rs. 60,000 per annum based on the coverage of the health insurance product you buy. More on that below.

Section 80D – Eligibility for Deduction

The deduction of premium paid on Health Insurance or Medical Insurance / Mediclaim under Section 80D can be availed of by any Indian taxpayer at the level of Individual or HUF (Hindu Undivided Family). The person claiming the deduction has to be the one who pays the premium for all members. The family members for whom the tax-payer can claim the deduction under Section 80D are as follows.

Self
Spouse
Parents
Dependent Children (non-earning male students up to age 25 only, non-earning females only till they are married)

Please note that other family members can indeed be covered by a health insurance or medical insurance / mediclaim plan (both individual and family floater), but the premium paid for them cannot be included for tax benefit under Section 80D.

Brothers and Sisters
Uncles and Aunts
Father-in-law and Mother-in-law
Grandfathers and Grandmothers
Nephews, Nieces, Cousins
Any other relatives

Annual Health Check-Up Expenses for the entire family also covered
In addition to the above, effective from AY 2013-2014, the cost of annual health check-up incurred on eligible members are also covered to the extent of 5,000 for the entire family put together. It may not be enough as such, but it certainly helps.

Medical Expenses of Super Senior Citizens above Age 80 also covered
In addition to the above, effective from FY 2015-2016, medical expenses of octogenarians, nonagenarians and centenarians, can be included.  That is, medical cost is allowed for deduction under Section 80D for very senior citizens beyond 80 years of age.  This is available up to the entire limit of 30,000 (explained below). This benefit is allowed only if they are not covered by any health insurance policy.

Non-Health Policies
Critical Illness policies are also included for benefit from Section 80D. However, term insurance and personal accident policies are not included.

NRIs are also covered under Section 80D
Yes, NRIs can also claim this tax benefit. The limits are exactly the same.

Section 80D – Extent of Deduction in a Financial Year

The limits up to which the tax-payer can claim benefits under Section 80D depend on the coverage of health insurance and medical insurance / mediclaim plans.

Group 1 : Family of Tax-Payer Covered Group 2 : Parents of Tax-Payer Covered Limit for Each Group (Group 1 + Group 2) Additional Limit for Cost of Annual Health Check-up Total Benefit from Section 80D
Self, Spouse, Children – 25,000 + 0 5,000 (included in Group 1 limit) 25,000
Self, Spouse, Children Both Parents < 60 yrs 25,000 + 25,000 5,000 (included in overall limit) 50,000
Self, Spouse, Children At least one parent > 60 yrs 25,000 + 30,000* 5,000 (included in overall limit) 55,000
Self > 60 yrs, Spouse, Children Sr. Citizen Parents > 60 yrs 30,000 + 30,000* 5,000 (included in overall limit) 60,000
* also includes health expenses of up to 30,000 for those above 80 years if they do not have any health insurance policy, but total overall cap for Group 2 will remain at 30,000.

Section 80D – Points to Note before Claiming Deduction

Medical Allowance : Tax Benefit under Section 80D is NOT the same as Medical Benefit which is part of your salary for which currently the limit is 15,000. It is over and above the Medical Benefit, so you can claim BOTH – Health Insurance / Mediclaim under Section 80D and Medical Allowance under Section 10. They will appear separately in your Form 16.
Multiple Policies : You can claim for more than 1 health insurance policy.  Do ensure you meet all the eligibility criteria for premiums paid for all the policies.
Top-up Health Policies : Top-up health insurance or medical insurance / medical plans are also eligible for the benefit.
Policy Proposer : It is not necessary that the tax-payer needs to be the proposer of the policy – she/he just needs to pay the premium to keep the policy in force.
Renewal Premium : You can indeed claim for renewal premium paid to keep a health insurance plan in force.  Do ensure it meets all other conditions mentioned herein.
Health Check-Up Expenses : Health check-up deductions are all-inclusive for family members put together. That is, for all family members (self, spouse, dependent children, parents) together to the extent of 5,000. It is NOT for each family member – do note that.
Salary Deduction : In case, you are paying the health insurance premium through Salary Deduction, you are still eligible to claim benefit under this section, as long as it is not a Group Health Insurance plan.
Independent Parents : Under Section 80D, one cannot include premiums paid for independent children, i.e. children who are earning income. However, you can claim this benefit for earning spouse and earning parents, i.e. even if they not dependent on you.
Part Payment by Individuals : In the case of part payment by you and a parent, both of you can claim deduction to the extent paid by each.

Section 80D – Exclusions

Mode of Premium Payment : Only the tax-payer, and not a third party, can pay premium for all the family members for whom tax deduction is claimed. Cash payments are NOT allowed for tax benefit – any other mode including online, debit/credit cards, etc. are acceptable. Cash is however acceptable as a payment mode towards annual health check-ups which can be claimed under Section 80D.
Exclusion of Service Tax : When claiming tax benefit, deduct the Service Tax and Cess portion from the premium amount.
Group Health Insurance and Group Mediclaim : Group Health Insurance premium provided by the company is NOT eligible for deduction under Section 80D. However, if you pay any premium to enhance the group cover for eligible members, you can indeed claim this contribution within the overall limits applicable for you.

Make your Health Insurance plan almost free with Section 80D!

As mentioned in the beginning, it is foolish not to use Section 80D tax benefit. Here’s a simple calculation.

A health insurance family floater product for a family of 2 adults (under age 45) and 2 children costs say Rs. 10,000 per annum (when you buy online) for a Sum Insured of Rs. 5 lakhs.

  • The biggest benefit is Health Insurance itself which is very beneficial.
  • Add to that the benefit from Section 80D. If you are in the 30% Income Tax bracket, you straight away save Rs. 3,000
  • Insurance companies generally offer free annual health insurance check-ups (costing Rs. 3000-4000 per person) to adults covered in the health insurance plan. This saves you another approximately Rs. 7,000 per annum!

So the 80D benefit and the benefit of Annual Health Check-up together compensate the premium of Rs. 10,000. Plus you get the benefit of Health Insurance from the policy renewable for your whole life! Which is what makes a health insurance product a must-have policy for every Indian family.


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8 thoughts on “Section 80D – Get Tax Benefits on Health & Medical Insurance”

  1. MintWise says:
    July 28, 2017 at 6:50 PM

    Neelam, only the person paying the premium can get the tax benefit. If your policy is a family floater, only one of you can get the deduction. The best way to get the tax benefit is to purchase two individual health policies.

    Here’s more on this.

    https://www.mintwise.com/blog/section-80d-limit-tax-benefit-health-mediclaim/

  2. Neelam Das Gupta says:
    July 28, 2017 at 4:43 PM

    we have family medical health insurance of 10 lac and r paying total premium of rs 50000 . can we both husband and wife claim income tax rebate under sec 80D of 25000 each separately. We both are tax payer and total premium was paid by my husband. Plz clarify

  3. Avinash Kumar says:
    July 3, 2017 at 6:21 PM

    very helpful article. searching for this long time but finally got the best article.

  4. jiya Mehta says:
    February 10, 2017 at 3:56 PM

    Your post helped me to clear my view upon 80D thank you so much..:)

  5. MintWise says:
    November 5, 2016 at 10:58 AM

    Good question. Yes Thyagarajan, 80D is applicable for NRIs as well.

  6. Thyagarajan says:
    November 4, 2016 at 10:35 PM

    Clear info. Thanks. Can you please tell us about 80d benefits for NRIs?

  7. MintWise says:
    November 4, 2016 at 12:19 PM

    Yes indeed, Prem. There is no differentiation between companies or its products as far as tax rules and regulations go.

  8. Prem Kumar says:
    November 4, 2016 at 12:17 PM

    Thank you for a good article. Please confirm if mediclaim from PSU companies is included in this benefit.

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