What is Section 80D? What are the tax benefits of health insurance policies?

An individual can claim certain deductions under Section 80 of the Income Tax Act. This includes exemptions on life insurance premiums and health insurance. Section 80D of the Income Tax Act allows taxpayers to opt for deductions on medical insurance premiums paid from their total income in a financial year. This is applicable for Hindu Undivided Family (HUF) as well. The deduction u/s 80D depends on the age of the taxpayer.

Here is everything you need to know about section 80D and what tax benefits can be availed under health insurance.

What is Section 80D?

The rule allows deductions on money spent as premium for health insurance policy and for healthcare of family members, including parents. The limit is dependent on age.

Tax benefits u/s 80D

An individual can avail a maximum deduction of Rs 25,000 for premium paid on health insurance of self, spouse or children if they are aged below 60 years. An additional deduction is available for insurance premiums paid for parents (up to Rs 25,000), if their age is below 60. If the age is over 60 years, the maximum tax benefit is Rs 50,000.

If the age of the parents or the spouse and the individual, for whom the insurance has been taken are over 60 years, the maximum benefit available is Rs 1 lakh.

If medical expenses incurred for senior citizens are not covered under any medical insurance, the taxpayer can claim a deduction for the expenses up to Rs 5,000 beyond the Rs 50,000 limit. Medical expenses incurred by individuals, parents or family aged below 60 years cannot be claimed u/s 80D.

In case an individual or their family member is over 80 years, health insurance is usually not available.

How to claim a deduction u/s 80D?

The Income Tax Department does not require individuals or HUFs to submit any document/receipt for claiming the deduction when they file their tax returns. As a matter of record, taxpayers should retain the proof of payment/receipt of insurance premium. Premium payments made online or offline are allowed, except cash. For online modes of payment, debit cards, net banking and credit cards are considered valid.