“I am just 22, I don’t need health insurance”. Most youngsters think like this. They believe they don’t really need health insurance. But that’s not right thinking.
There’s a higher chance that many youngsters may end up with cardiovascular diseases due to poor diet, sedentary lifestyle, smoking, diabetes, etc. But health concerns are not the only reason to get health insurance.
Considering the fact that medical inflation in India has reached 14%, it has become more important than ever to have insurance to cover medical costs. Secondly, insurance premiums are cheaper when you buy a plan at a younger age, allowing you to opt for higher coverage along with necessary riders.
The Government also encourages the purchase of Health Insurance by offering tax benefits. Premiums paid towards health insurance plans can be claimed as deduction under Section 80D of the Income Tax Act. However, the limit of deduction varies. I’ll be explaining them in detail in this article. Read on to find out more.
Important Note: Tax Benefits shouldn’t be your primary reason for buying health insurance. Health insurance is very important and you need one irrespective of being healthy. Think of it as a risk planning tool.
Section 80D
According to the Income Tax Act, any individual or HUF, who has purchased medical insurance in a financial year, is eligible for deduction of premium paid, under Section 80D. This deduction is over and above the Rs 1.5 Lakh deduction available under Section 80C.
An individual can claim deductions not just for themselves but also for any premium paid towards medical insurance of their spouse, dependent children and parents.
How much can you deduct under Section 80D?
This majorly depends on one’s age. Here are multiple scenarios and the limits in each case:
| Covered Individuals | Deduction for Self & Family | Deduction for Parents | Preventive Health Check-Up | Max Deduction u/s 80D |
| Self, Family & Parents (All Below 60 Years) | 25,000 | 25,000 | 5,000 | 50,000 |
| Self, Family & Parents (All Above 60 Years) | 50,000 | 50,000 | 5,000 | 1,00,000 |
| Self & Family (Below 60 Years) Parents (Above 60 Years) | 25,000 | 50,000 | 5,000 | 75,000 |
| Members of HUF (Below 60 years) | 25,000 | 25,000 | 5,000 | 50,000 |
| Members of HUF (Above 60 years) | 50,000 | 50,000 | 5,000 | 1,00,000 |
Do note that one is also eligible for a deduction of up to Rs 5,000 paid towards medical health check-up. But this Rs 5,000 deduction will be within the maximum allowable deduction under section 80D as per conditions.
For senior citizens (Resident + above 60 years), who do not have health insurance, a maximum of Rs 50,000 can be deducted as medical expenses. Here medical expenses refer to payments towards medical consultations, impairment aids, medicines, etc.
Important Note: One must note that any payment made in cash will not be eligible for deductions under Section 80D. Cash payments are allowed only for preventive health checkups within the limit of Rs 5,000.
Bonus – a secret hack
Did you know that even multi-year policies are eligible for deductions under Section 80D?
Usually, people pay upfront for multiple years to get a discount on health insurance premiums. This is allowed as a deduction because insurance companies usually give the break-up of the premium for multiple years.
However, the amount of deduction will still be within the allowable limit u/s 80D, subject to the conditions for a particular financial year.
So what are you waiting for? First things first, go sort out your health insurance and utilize Section 80D to claim tax benefits toward premiums paid. Insure yourself and your family to avoid a sudden financial crisis.
