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    Tax Benefits on a Health Insurance Policy

    Car Insurance
    • Premiums as low as Rs12/day for coverage of Rs.4 Lakhs*
    • 10,000+ hospitals for cashless treatment
    • Claim up to Rs. 55,000 deduction under section 80D**

    A comprehensive health insurance plan is a must-have regardless of what age you are, since ill-health can befall anyone at any time. With the rising number of illnesses and increasing cost of healthcare, treating an illness or ailment without insurance can leave a big dent on your savings. A health insurance policy can help you save your hard-earned money in case of a medical emergency. Apart from the coverage benefits that these policies offer, health insurance plans also help you save money by availing tax benefits/tax deductions under the prevailing laws of the Income Tax Act, 1961.

    Tax Benefits under Section 80D

    • The premiums that you pay towards your health insurance policy are eligible for tax benefits under Section 80D of the Income Tax Act, 1961.
    • You can claim tax benefits irrespective of whether the policy is in your name or in the name of your spouse, children, or parents.
    • Tax benefits can be claimed on policies maintained for children and parents, regardless of whether they are dependent or not.
    • The amount of tax benefit that you are eligible to claim will depend on the age of the policyholder. For policies purchased for self, spouse, children, and parents, if the age of the policyholder is lesser than 60 years of age, one can claim tax benefits up to Rs.25,000 p.a. If the policyholder’s age is 60 years or more, one can claim a tax benefit up to Rs.30,000.
    • If are under the age of 60 years with parents over 60 years of age and you pay premiums for your policy and your parents’ policy, you can avail a maximum tax benefit of Rs.55,000 p.a.
    • On the other hand, if you and your parents are over the age of 60 years and you have a health insurance policy for yourself and for your parents, you can avail a maximum tax benefit of Rs.60,000.
    • One can avail tax benefits under Section 80D for premiums paid towards health insurance policies. However, you can also claim tax benefits under Section 80D for critical illness riders that you purchase with a life insurance policy.
    • A tax benefit up to Rs.5,000 is provided, within the maximum limits of Rs.25,000/Rs.30,000, for preventive health checks.
    • Only non-cash premium payments by policyholders are eligible for tax benefits. However, cash payments for preventive health checks are eligible for tax benefits under Section 80D.
    • Hindu Undivided Families (HUFs) can claim tax benefits on premiums paid towards a policy for any member in the HUF.
    • Individuals aged 80 years and above can claim tax deductions up to a sum of Rs.30,000 for upkeep of their health even if they don’t have a health insurance policy.

    Tax Limit under Section 80D

    Insured Persons Below 60 Years of Age Above 60 Years of Age
    Self, Spouse, and Children Rs.25,000 Rs.30,000
    Parents Rs.25,000 Rs.30,000
    Preventive Health Checks Rs.5,000 Rs.5,000
    Maximum Deduction Rs.50,000 Rs.60,000

    Tax Benefits under Section 80DD

    Both individuals and Hindu Undivided Families (HUFs), who are residing in India for the given tax year, are eligible to claim tax benefits under Section 80DD. Tax benefits can be availed for expenses incurred in the treatment/medical care of a dependent family member who suffers from a disability, such as blindness, hearing impairment, autism, etc.

    Criteria Exemption Limit
    Disabled Dependent (40% disability or more) Rs.75,000
    Severely Disabled Dependent (80% disability or more) Rs.1,25,000

    *Note: Tax benefits mentioned are for the assessment year 2016-2017.

    Tax Benefits under Section 80DDB

    Hindu Undivided Families (HUFs) and individuals, residing in India, can avail tax benefits under Section 80DDB for treatments undertaken for certain specific diseases, such as Dementia, Aphasia, Parkinson’s Disease, Motor Neuron Disease, Chronic Renal Failure, Malignant Cancers, Thalassemia, Haemophilia, AIDS, Ataxia, Dystonia Musculorum Deformans, Hemiballismus, Chorea, and Motor Neuron Disease.

    The tax benefit can be claimed for treatment of self, spouse, parents, children, or siblings, provided they are dependent on you.

    Age of Individual Exemption Limit
    Individuals under 60 years of age Rs.40,000 or the actual amount paid for the treatment, based on whichever is the lesser of the two
    Individuals between 60 and 80 years of age Rs.60,000 or the actual treatment cost, based on whichever is the lesser of the two
    Individuals over the age of 80 years Rs.80,000 or the actual cost of treatment, based on whichever is the lesser of the two

    *Note: Tax benefits mentioned are for the assessment year 2016-2017.

    Tax Benefits under Section 80U

    Individuals who suffer from disability can claim tax benefits up to Rs.75,000 in case one suffers from a minimum of 40% disability and up to a sum of Rs.1,25,000 in case of severe disability.

    Conclusion

    The primary purpose of any health insurance policy is to provide the insured member a risk cover against any expenses that he/she might have to incur due to an unplanned or planned hospitalisation. However, investing in a health insurance plan not only buys you a comprehensive risk cover, but it also helps you avail tax benefits, and thereby save more money.