Section 80D - Tax benefits on taking a Health Insurance Plan

Healthy is an outfit that looks different on everyone but makes sure you look excellent. In this ever-changing lifestyle which is so dependent on technology, lives a fast-paced life, and has long working hours, the stress on the personal and professional front is ever increasing. Add to this lifestyle, the changes in climatic conditions; we are vulnerable to numerous diseases.

Hence, one needs to be proactive and identify a good health insurance. It isn’t a luxury or an option to purchase but an absolute necessity. Our government is equally supportive of this and hence is providing benefits under Section 80 D of the Income Tax Act, 1961. A health insurance prepares you financially for any medical emergency for you and your family. It’s the shield that keeps your family safer and healthier in difficult times of your life.

In the financial budget of 2018, our finance minister proposed more income tax benefits under Section 80D of the Income tax Act, 1961. Section 80D offers income tax deduction towards the payment of medical insurance or medical premium.

• An individual can claim a tax deduction up to INR 25,000 a year for medical insurance premium paid for self, spouse, and children.
• An additional INR 25, 000 paid as premium for parents can also be claimed as a deduction under section 80 D.
• If parents are a senior citizen, then one can claim deduction which has been increased from INR 30,000 to INR 50,000
• Annual premium on health insurance policy or preventive health check of a senior or medical expenditure with respect to a senior citizen beyond 80 years is available as a deduction.
• This reduces your tax liability if you are paying for health insurance of your senior citizen parents up to INR 75000 with the increased limit.
• There are also changes in deduction available on single premium health insurances with a cover of more than one year
• The health insurers will typically provide a certain amount of discount if you pay a premium for a few years together at one go.
• Initially one could claim a deduction only up to INR 25,000 but under proposed changes in the budget, in case of single premium health insurance policies having the cover of more than one year, the deduction will be allowed on proportionate basis for the number of years for which health insurance cover is provided subject to the specified limit.
• For example, your insurer is offering a 10 percent discount on health insurance premium if you pay INR. 40,000 for the two-year cover.
• With new proposed changes, the individual can claim INR 20,000 each in both years.

Who are eligible for tax benefits under Section 80 D if you have paid a premium on mediclaim policy:

• Yourself, Your Spouse, Dependent Children, Your parents (Dependent or Independent) are all eligible for tax deduction under Section 80 D

A total of four different types of deductions can be claimed under Section 80 D which are classified as:

• Health insurance premium paid for you & your family are allowed as a tax deduction
• Health insurance premium paid for your parents are allowed as a tax deduction
• Tax deduction on preventive health check-up expenses
• Tax deduction on medical expenses of super senior citizens

Maximum deduction under Section 80 D for the annual year 2018 -19 is

• One can claim a tax deduction up to INR 5000 for your expenses on preventive health check-up within the overall limit of Rs 60000.

Tax Deduction on Health Insurance Premium paid for your family and for your parents:

• If you pay a premium for health insurance taken by you for your family then you are eligible to claim tax deduction under section 80D up to INR 25,000 for the year 2017-18
• Deductions for senior citizen are higher basis the new limit i.e. INR 30,000 or else for your parents it is INR 25,000 as mentioned in budget 2018
• There is another tax benefit on preventive health check-up expenses under Section 80 D if you have incurred expenses on health check-up of your family, parents and yourself.
• Up to INR 5000 which is not an addition to the maximum deduction of health insurance premium paid under Section 80 D
• Another scenario is if you or any member of your family or either of your parents is a senior citizen who is 80 years or above in age and not covered in any health insurance, you can still get a tax deduction. The condition to this is you take care of their medical expense and amount that you can claim a tax deduction is up to INR 50,000 as per the new budget of 2018.
• For one to claim deduction under this section, health insurance premium should always be paid by any mode other than cash. However, medical or preventive health check-up expenses can be paid in cash.
• There is another option to save tax but that is under Section 80 DDB, which is the medical treatment of specified disease or ailment as prescribed by the government.
• It protects you against critical illness and provides tax deductions up to INR 40,000 and INR 60,000 for senior citizens and Rs. 80, 000 for super senior citizens.
• If there is medical illness due to specific illness such as Neurological diseases where the disability levels are above 40%., Malignant Cancers, AIDS, Chronic renal failure, Haematological disorders
• One will have to submit a certificate provided by the hospital while claiming tax benefit.
• One can claim this benefit their own self, dependent spouse, children, parents, and siblings

One can also claim deduction under Section 80 DD for treatment of dependant with disability where you are taking care of treatment expenses of disabling, only when dependants are your spouse, parents, children, and siblings. You are eligible for a deduction up to INR 75,000 against the expenses incurred for the medical treatment, training rehabilitation, and nursing. This also includes maintenance of dependant by a caretaker is also eligible for tax deduction up to INR 1.25 lakh for severe disability.

A person with a disability is also eligible for a tax deduction of INR 75,000 under Section 80 U and in case of severe disability, the limit increase up to INR 1.25 lakh.

You know with the above information, there are various benefits of purchasing a health insurance plan. You can’t buy a good health, however by purchasing and availing the tax benefits under Section 80 D, you can open an extremely valuable savings account for a life for your entire family.

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