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How To Claim Tax Benefits On Medical Insurance Premiums?

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Health insurance is essential to 20- and 30-year-olds, yet many still need to learn about it. They think health insurance is for the elderly and extra. But even 20-year-olds have cholesterol and diabetes. Thus, early health insurance purchase is crucial. Section 80D of the Income Tax Act allows income tax deductions for medical insurance premiums to encourage people to opt for health insurance.

Health insurance should be purchased to safeguard your health, but the tax deduction is an ideal bonus. Before claiming health insurance premium tax benefits*, clarify the following:

  • Health insurance tax deductions: eligibilty
  • Maximum tax deduction
  • How to claim deduction?

Who can deduct health insurance taxes?

Health insurance premiums are tax-deductible under Section 80D.

  • You, your spouse, dependent children, or parents have health insurance.
  • Health Insurance Tax Deductions for HUFs

If you bought health insurance for yourself and your parents, you could deduct this much:

1. Under-60 (proposer and parent):

If you’re under 60 and buy an individual health plan then you are eligible claim  tax deductions upto Rs.25,000 in a year on your claim cost. You also get an added Rs.25,000 reward if you opt for a health insurance for your dependent parents aged under 60.

2. 60+ (parent)

The preventive health check up deduction limit increases to Rs. 50,000 from Rs. 25,000 if you buy an individual health plan for a parent over 60.

If you buy an individual policy for yourself and your parents and are under 60 and your parent is over 60, you can claim a tax deduction of up to Rs. 75,000. Health insurance premiums are deducted at Rs. 25,000, and senior parent premiums at Rs. 50,000.

3. 60+ (proposer and parent)

Medical coverage are tax-deductible up to Rs. 1 lakh if you and your dependant parent are above 60. You and your dependant parent, who has a health insurance policy, would receive an Rs. 50,000 rewards because you are over 60.

Health insurance premium tax deduction

Income tax returns allow health insurance tax deductions. Follow these steps:

In the “Deductions” column of your ITR form, select “80D” for health insurance premium deductions. You can now choose the deduction criteria from a drop-down menu. Choose the deduction option from seven. Options are:

  • Self-and-family
  • Self (60+) and family
  • Parent
  • Parent (Above 60 years)
  • Family and parents
  • Family with elderly parents
  • Self (60+) and family with parents 60+

Attach documentation and documents so the IT department can validate your deduction. Note that medical coverage premium tax deductions can only be claimed if paid by net banking, credit/debit card, check, or draught. Cash premiums are not tax-deductible. To claim the deduction, you need supporting documentation and verification.

When do you claim health insurance tax deductions?

Tax deductions can only be claimed when filing ITR for the relevant fiscal year if you paid the premium. Premiums paid in the previous year or next year cannot be deducted.

Using health insurance tax deductions –

The limits and criteria above apply to tax benefits*. Avoid the last-minute bustle by filing your ITR a few weeks in advance. This will give you enough time to furnish appropriate health insurance information and easily claim deductions.

Tax benefit is subject to change in tax laws.

“As Insurance is a matter of solicitation its recommended to obtain complete information about the exclusions, benefits, terms & conditions and limitations of the insurance. Kindly carefully go through the sales policy/brochure before opting for any Insurance.”

*As per the IRDAI Insurance plan, all savings are provided only by the insurer. Standard Terms & Conditions apply.

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