Applicability & Deductions on Medical Insurance Under Section 80D

Medical emergency situations can take place at any time. Whether you or anyone in your family may require undergoing emergency medical treatment in an unexpected manner. To prevent last-minute financial concerns, it is a must to have medical insurance by side. Though not compulsory in India until now, medical insurance is highly encouraged by the Indian government. In fact, tax deductions are provided on medical insurance under Section 80D. If new to the medical insurance concept and unaware of the applicability and deductions, you are at the right place. To have a better understanding, let us shed light on the same.

Section 80D - Applicability

Any individual or HUF (Hindu Undivided Family) is eligible to claim a deduction under Section 80D for their medical insurance. When an individual buys medical or health insurance, they become eligible for tax benefits. What’s best is that one also gets the advantage of buying a policy for covering their spouse, or dependent children or parent. The key aspect here to note is that it is over and above the deductions claimed under Section 80C, Section 80CCC, and Section 80CCD.

Section 80D - Deductions

For deductions, refer to the below-mentioned section:

• The list of the deduction for an individual taxpayer comprises:

1. A deduction of up to Rs. 25,000 for health insurance policy premium paid for self, spouse, as well as dependent children.

2. An additional deduction of up to Rs. 25,000 if parents are less than 60 years of age.

3. An additional deduction of Rs. 50,000 if your parents are more than 60 years.

4. If both taxpayer and parent are more than 60 years of age, the maximum deduction available under Section 80D is up to Rs. 1 Lakh. (It must be noted that senior citizens also include very senior citizens.)

• The list of deductions for HUF is as follows:

1. A deduction of Rs.25,000 under section 80D for a policy taken for any of the members of the HUF, where the member insured is less than 60 years.

2. A deduction of up to Rs. 50,000 if the insured individual is of 60 years or more than that.

• In case of preventive health check-ups:

A deduction of up to Rs. 5,000 that can also be claimed either by the individual for himself, spouse, dependent children, or parents. An important thing to note is that the payment for preventive health check-ups can be made in cash. Also, that the deduction of Rs. 5,000, which can go up to Rs. 25,000/Rs. 30,000 limit.

• In the case of a single premium health insurance policy:

In Budget 2018, a new provision for claiming a deduction with respect to single premium health insurance policies was given. As per the new provision, where the taxpayer has made a lump-sum premium payment in a single year for a health insurance policy, valid for more than one year, he or she can claim a deduction equal to the appropriate fraction of the amount according to the Section 80D. The appropriate fraction can be found by dividing the lump sum premium paid, by the number of years of the policy. It must be noted that this would again be subject to the limits of Rs. 25,000 of Rs. 50,000 as per the case.

Things to Take Note of Before Buying Health Insurance

Here is a list of things to remember:

1. Contribution towards health insurance plan should be made to a scheme as per the Central Government approved by IRDA.

2. For premium payment, any mode other than cash should be used.

3. Health insurance premium paid for a policy covering brother, sister, grandparents, aunts, uncles or any other relative is not eligible for claim as a deduction for taking tax benefit.

4. Premium paid on behalf of working children cannot be considered for tax benefit.

5. If the policy premium is made partly by you and your parents, both of you can claim a deduction to the extent paid by each.

6. The deduction has to be taken without including the Service Tax and Cess portion from the premium amount.

7. The premium for group health insurance or corporate insurance provided by the organization is not eligible for deduction.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.