Your health insurance premium can help you save big on tax; here’s a complete guide to Section 80D income tax deductions

How does Section 80D work?

In simple terms, Section 80D lowers a person’s tax liability by reducing their taxable income. For example, the health insurance premium that you are paying for yourself and/or for other members of the family will be subtracted from your taxable income. It won’t be deducted from the overall tax amount that you will have to pay. Further, the quantum of tax benefits offered by Section 80D is also dependent on the age of the person insured. There are three ways how Section 80D works in this regard:

1. You can claim a deduction of Rs.25,000 under section 80D on insurance for self, spouse and dependent children. An additional deduction for insurance of parent(s) is available up to Rs 25,000, if they are less than 60 years of age, which takes the total deduction to Rs 50,000.
2. If the parents are aged above 60, the deduction amount is Rs 50,000. In this case, you can claim a total deduction of Rs 75,000 from which Rs 25,000 is on the premium paid for self, spouse and dependent children and Rs 50,000 on the premium paid for senior citizen parent(s).
3. If both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section goes up to Rs.1 lakh (Rs 50,000+Rs 50,000).

Additional benefit of Rs 5,000 with health check-ups

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Further boosting Section 80D’s tax saving benefits are health checkups. Helpful in detecting several diseases at an early stage, regular preventive health checkups can go a long way in protecting you from lifestyle ailments and many leading healthcare companies or hospitals provide extensive packages to keep your health in check. The good news is that preventive health checkups also facilitate a deduction of Rs 5,000 from your income tax liability. For instance, if you are paying a health insurance premium of Rs 25,000 per annum for a mediclaim policy, and have opted for a health checkup for yourself, or for your parents/spouse/dependent children during the financial year, you can avail a total deduction of Rs 30,000 on your income. This additional benefit offered by Section 80D is thus a good way to smartly manage your income tax.

Inclusive of both fixed benefits and indemnity based health insurance policies

Now, one might wonder how Section 80D tax benefits might work for indemnity-based plans and defined benefit plans- the two popular forms of health insurance in India. For this, one needs to understand how these two plans work. An Indemnity Plan is a form of health insurance plan that reimburses the actual expense incurred during hospitalization up to the predefined limit under the scheme. The amount that is reimbursed depends on the sum insured by the policyholder, which is the maximum amount of claim that the insurer reimburses subject to the policy conditions.

On the other hand, defined benefit plans are a type of health insurance cover designed to provide financial safety against predefined events, like a critical illness. Here, the entire sum insured gets paid to the policyholder if a predefined ailment sets in. The benefits of Section 80D, however, are applicable to both the plans.

• Cashless claims facility at over 6,500+ hospitals across the country
• Cashless claim settlement within 60 minutes
• Maximum coverage at affordable rates
• Access to better medical care with a wide range of network hospitals across India
• Quick claim settlement
• Easy purchase and renewal of policies
• In-house Health Administration Team (HAT) for faster claims processing
• 24×7 call assistance for claims settlement and other health insurance related queries