Introduction:

Section 80D allows individuals or HUFs to claim a tax deduction, equal to a percentage of the annual gross income, for medical insurance premiums paid during the year, including coverage for critical sickness plans or supplemental health insurance. Premiums paid for health insurance plans covering a spouse, dependent children, or parents are eligible for a deduction benefit, in addition to the premium for the plan covering the taxpayer themselves.

Who Qualifies and How to Avail Tax Benefits

Only individuals or households falling under the taxpayer category can deduct medical insurance premiums and expenses for themselves, their families, and medical expenses incurred on behalf of senior citizens.

Individual or HUF taxpayers can benefit from insurance premium payments made for the following:

• Self
• Parents
• Spouse
• Dependent children

This deduction is exclusive to individuals or HUFs; entities such as companies or firms are ineligible to claim it under this section.

Payments Eligible for 80D Deductions:

An individual or Hindu Undivided Family (HUF) can claim a deduction under Section 80D for payments related to:

• Medical insurance premiums for oneself, spouse, dependent children, or parents must be paid using a non-cash payment method to qualify for deductions.
• Deductions can be claimed for expenses related to preventive medical examinations and screenings.
• Contributions made to government-run health schemes, whether by the Central Government or any other notified government scheme, are eligible for deductions.
• Medical expenses for elderly persons (aged 60 or over) not covered by health insurance are eligible for deductions.

Deduction under Section 80D for Tax Savings

Under Section 80D, the maximum annual deduction is Rs 25,000, and for senior citizens, the permissible maximum deduction is Rs 50,000.

Hindu Undivided Family (HUF):

A Hindu Undivided Family (HUF) can claim a deduction under Section 80D for insurance premiums paid for a policy covering its members.

• For Section 80D, the deduction is Rs 25,000 if all insured members are under 60, but it increases to Rs 50,000 if even one member is 60 or older. When buying medical insurance for the deduction, consider that premiums for siblings, parents, and other family members are not eligible. No deduction is available for insurance premiums on behalf of employed children. If both you and a parent contributed, each can claim a deduction proportionate to the amount contributed. Deduction should be claimed without deducting the premium component corresponding to the service tax or the cess.
• The employer’s payment for the group health insurance plan is not tax-deductible, but any non-cash payment method, including credit cards or online payments, can be considered for the deduction of the premium.

Individual:

• An individual can claim a deduction of up to Rs 25,000 for the premiums paid for themselves, their spouse, and dependent children.
• If your parents are aged 60 or above, you can claim a deduction of Rs 50,000; if they are under 60, the eligible deduction for the insurance premium is Rs 25,000.
• If medical expenses for senior citizens (taxpayer/family and parents) were not covered by insurance, you can claim a deduction for those costs, up to a maximum of Rs 5,000 within the Rs 50,000 limit.
• If an individual, their spouse, or both parents are over 60 with medical coverage, the maximum deduction is Rs 100,000 for everyone covered. Senior citizens are those aged 60 or older, and very senior citizens are older. No tax deduction is possible for medical costs paid by individuals, families, or parents under 60.

Advantages of Health Check-ups under 80D

Starting in 2013-14, the government introduced a deduction for preventive health check-ups, promoting individual responsibility for health by encouraging regular check-ups for disease detection and risk reduction.

Payments for preventive health check-ups are eligible for a Rs 5,000 deduction under Section 80D, within the overall limit of 25,000 or 50,000 rupees. This deduction applies to the individual, their spouse, dependent children, or parents living with them, and cash is an acceptable payment method.

Conclusion

Health insurance offers financial protection and encourages regular health check-ups, supporting universal healthcare access and reducing expenses. Understanding Section 80D helps optimize tax savings for individuals and HUFs.