How to Claim Tax Benefits with Your Health Insurance Policy : Imagine saving a chunk off your tax bill by simply taking care of your family’s health. Sounds like a win-win, right? Your health insurance in India is not only your shield against rising medical costs but also a wise financial decision as per the Income Tax Act.
For every premium you pay, you are not just buying peace of mind for medical emergencies, but are also enjoying meaningful tax benefits. Many qualify for these benefits, but don’t know how to claim them. This guide covers how your policy can lead to tax savings and how you can claim them.
Knowing About the Legal Aspect
Section 80D of the Income Tax Act, 1961, allows tax deductions for premiums paid towards health insurance plans. It covers not only individual policies but also those purchased for families and dependent parents.
This serves as an incentive that encourages more people to buy health insurance. The total tax benefit available under this section can go up to ₹ 1 lakh per financial year, depending on the age and relationship of the insured.
The deduction is applicable for premiums paid for the following:
- Self
- Spouse
- Dependent children
- Dependent parents
- Members of a Hindu Undivided Family (HUF)
Tax Deduction Limits Under Section 80D
The amount you can claim as a deduction depends on the age of the insured members. Here is a clear breakdown:
| Policyholder Group | Age Criteria | Deduction Limit |
| Self, spouse, children | All below 60 years | ₹ 25,000 |
| Parents | Below 60 years | ₹ 25,000 |
| Self, spouse, children | All 60 years or above | ₹ 50,000 |
| Parents | 60 years or above | ₹ 50,000 |
| HUF | Karta below 60 years | ₹ 25,000 |
| HUF | Karta 60 years or above | ₹ 50,000 |
| Non-Resident Indians (NRIs) | Any age | ₹ 25,000 |
It is important to note that the total deduction for all eligible members combined cannot exceed ₹ 1 lakh.
What About Preventive Check-ups?
Everyone should seek medical attention from time to time for the early detection of illnesses. The best part? These preventive health check-ups are also covered under Section 80D. But this benefit is not an additional allowance. It is included within the total limit of ₹ 25,000 or ₹ 50,000.
Here are the key highlights:
- A deduction of up to ₹5000 is available.
- The limit is raised to ₹ 7,000 for people above 60.
- This benefit applies to check-ups for self, spouse, children and parents.
- The payment can be made in cash.
- The check-up must be conducted at a recognised hospital or institution.
- This benefit is allowed only if the total 80D limit has not already been exhausted through premium payments.
Exclusions Under Section 80D
Some exclusions that you should bear in mind are as follows:
- Payments in Cash: Premium payments done using cash aren’t eligible for tax deduction. Only non-cash payments are eligible.
- Non-Dependent Members: You can’t deduct premiums for brothers, sisters, grandchildren or an employed child.
- Group Insurance paid by Employer: If your company pays for your group insurance, then you cannot claim a deduction under section 80D on that premium.
- Foreign Health Insurance: You cannot claim for health policies bought outside India.
Steps to Claim the Tax Deduction
Enjoying the deductions available with your medical insurance policy requires knowing how to make claims. Here is a breakdown of the steps:
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Buy a Qualifying Policy
Choose a mediclaim policy that covers you, your family and dependent parents and ensure the insurance provider is registered in India.
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Pay Using Non-Cash Mode
Make sure the premium is paid using net banking, debit card, credit card or any other digital payment mode. Cash premiums are not eligible.
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Collect and Save Payment Receipts
Maintain records of premium payment receipts and ensure they clearly mention the insured members and payment details.
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Get the Premium Certificate
The insurance company will issue a certificate confirming the premium paid, the names of insured members and the policy term. Keep this handy for filing returns.
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Determine Eligible Amount
Check the age of each insured member to determine your total deduction eligibility under Section 80D.
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File Your Income Tax Return
Declare the amount under the ‘Deductions’ section for Section 80D at the time of filing the income tax return.
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Retain Medical Bills for Preventive Check-ups
Availing deductions for a preventive health check-up is possible. But keep the bills handy and see to it that the total amount doesn’t exceed the specified limit.
Conclusion
Health insurance is not all about coverage in case of a catastrophic event in one’s life. It also provides tax benefits in the long run via savings under Section 80D. Make sure to document and be on top of your limits and deductions to make the most out of it every year. Stay smart, plan smart and let the best health insurance plan serve your well-being and your wallet.