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.
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.
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.
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|
Section 80D – Points to Note before Claiming Deduction
Section 80D – Exclusions
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.