Making Sense of Tax Benefit on Health Insurance – 80D Section of Income Tax

Tax Benefit on Medical Insurance under Section 80D

You might have heard stories where a serious medical condition in a family has drained them of their wealth. These are not just stories but can happen to anyone. To guard against such issues – you must buy Health Insurance. The good part is you also get tax benefit on premium paid for Health insurance. In this post we resolve what’s and How’s of Tax Deduction on Health Insurance sec 80D!

How much Tax Benefit I get on Health Insurance?

Budget 2018 has enhanced the limit of Health Insurance premium eligible for tax deduction under section 80D for Senior citizens. The limit is Rs 25,000 for people with age less than 60 years and it’s Rs 50,000 for senior citizens. You can also claim Rs 5,000 for Preventive Health checkups. This is within the Rs 25,000/50,000 limit.

You can also claim additional tax benefit on Health insurance premiums paid for your parent.

What’s the Tax Benefit for Health Insurance of Parents?

You can claim additional tax deduction on the premium paid for Health Insurance of your parents. This can be up to Rs 25,000 in case your parents are below 60 years of age and Rs 50,000 in case any one of your parents is above 60 years of age.

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But just paying premium is not enough. The policy should have been bought by you i.e. you should be the proposer of the policy. There are cases when people pay premium for an existing policy which was bought few years back by their parents and claim tax deduction u/s 80D. This can land you in trouble. So the best way is to either buy a new policy or write to the concerned insurance company to change the proposer at the time of renewal.

Health Insurance – Tax Benefit Available – FY 2018-19

Can premium be split between Husband and Wife for tax benefit?

Suppose you bought family floater Health insurance which has premium of Rs 35,000 which covers self, spouse and children. Now can you split this premium between husband and wife so that both can claim benefit? The answer is NO. The reason being there can only be one proposer for a policy and hence the tax benefit can only be claimed by one.

To get around this you may opt for two separate policies but keep in mind the overall premium might be higher. So do your calculations before deciding.

Also Read: What is the Maximum Income Tax You can Save for FY 2018-19?

What’s the tax Benefit on preventive health checkup?

Tax exemption up to Rs 5,000 is allowed for preventive health checkup of Self, Spouse, dependent Children and Parents. This limit is within the Rs 25,000/Rs 50,000 deduction.

Tax Benefit on Medical Insurance under Section 80D

Important Points:

1. The maximum tax deduction u/s 80D can be Rs 1,00,000 in case you buy Health insurance for self and your parents and both you and your parents are senior citizens.

2. HUFs can also claim this deduction for premium paid for insuring the health of any member of the HUF

3. To avail deduction the premium should be paid in any mode other than cash. However the payment for Preventive Health checkup can be done in cash.

Amit

Hi Readers! I am Amit, the mind behind Apnaplan.com I am MBA from NITIE, Mumbai and BIT from Delhi University. This blog is my online diary where I write about my tryst with my investment decisions. In the 400+ posts on this blog you will find articles on Personal Financial Planning, Investments, Retirement Planning, Insurance, Loans, Fixed Deposits, Provident Funds, Stock Markets, Gold, Silver, Real Estate Investment, Credit Cards, Credit Score, Taxation, Inheritance Planning and Reviews on various Financial Products.

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View Comments

Priyajit says:

August 14, 2017 at 2:34 pm

Thanks a lot for such detailed information. One query is there. Suppose policy is brought by mt parents. Now in the next renewal I change the proposer name to myself. Then in case, my parents pay the premium from their account. Will my parents be able to claim tax benefit(as the proposer name changed to my name)?
- Amit says:
  
  August 14, 2017 at 8:13 pm
  
  I don't thin so your parents would be able to claim tax benefit. As per me You should always avoid these grey areas :)
Divyang Mehta says:

August 12, 2017 at 9:38 am

HI amit
I have a two younger sister and both are married , My one sister husband is suffering with cancer of stage-II . He had a job with private sector and Yearly income is 2.5 lac . While my sister is house wife .They are not having that much financial condition . So during two times surgery we had supported her for financial . I just want to know that how i will claim this amount . further I want to know that , How I will shown that My one sister is Dependant on my income. Pl help me for the solution.
- Amit says:
  
  August 12, 2017 at 12:37 pm
  
  As per my understanding you may not be able to show your married sister/brother-in-law as your dependent and hence cannot claim any tax benefit on this amount.
Balaji P says:

February 1, 2017 at 11:33 pm

Amit, one of my parent is suffering from severe disease, so how to figure out whether this disease falls in the list of accepted severe medical condition. And she need to take medicines for treatment as maintenance dosage where we need expend around Rs. 5000 - 6000 per month, so how much I claim per annum and under what section of 80...and also what medical certificate required from Government Hospital Doctor etc...
- Amit says:
  
  February 4, 2017 at 2:11 pm
  
  Following diseases are covered under section 80DDB:
  Neurological D
  
  iseases
  Parkinson’s Disease
  Malignant Cancers
  AIDS
  Chronic Renal failure
  Hemophilia
  Thalassaemia
  
  You need a certificate from specialist from Government Hospital would be required as proof for the ailment and the treatment...
Ashutos says:

March 28, 2016 at 9:07 am

Hi,

I find myself in the below situation:

1. Premium of family floater (self, spouse, child) = Rs 17,000/- [Count against the Rs25,000/- deduction for self/family. So, balance left is Rs 8,000/-]
2. Premium Paid for senior citizen father = Rs 18,000/- [Count against Rs 30,000/- limit for parents who are senior citizens. Balance available after claim is Rs 12,000/-]
3. Premium paid to employer for Top-up of Group insurance (family + parents) = Rs 11,000/-

Question is how & where to include the item#3 for the premium of Rs 11,000/-?
a) Utilize the complete Rs 11,000/- against limits available for senior citizen parents' head?
b) Split the Rs 11,000/- into per head cost of around Rs 2,200/- (5 pax) and then add the same to respective heads of Rs 25,000/- and Rs 30,000/- limits?

My research tells me that our tax guidelines are silent on this sort of situations, and leaves the door open for interpretations by the tax-payer and the tax-officer.

Your inputs will be helpful.

Thanks,
Ashutosh
- Amit says:
  
  August 13, 2017 at 10:33 am
  
  You are right. You can do either of option a or b - should not be a issue!
Yogesh says:

January 8, 2016 at 12:54 pm

Let Me tell you Mr Amit, You are doing wonderful Job !!! Bravo and Thumbs up for you... CA Yogesh
- Amit says:
  
  January 8, 2016 at 12:57 pm
  
  Thank you :)