Section 80D Guide: Health Insurance Tax Deductions

Posted on: Jan 20, 2023 | 3 mins | Written by: HDFC ERGO Team

Section 80D Guide: Health Insurance Tax Deductions

Under Section 80D of the Income Tax Act of 1961, you can claim deductions for the premiums paid on medical insurance. However, to qualify for these deductions, you should remember two things. You are not required to submit documents while filing your Income Tax Return (ITR), but you should keep valid proof of premium payments and medical expenses in case the tax authorities ask for verification later. Secondly, you can claim deductions only if you have used a non-cash mode for premium payments (cheques, UPI transfers, credit cards, debit cards, etc.).

As you sit down with your CA and plan your taxes, you will likely explore different sections of the Income Tax Act to save tax. Section 80D is one of the most useful provisions, as it offers tax benefits on premiums paid for health insurance policies.

The Tax Deductions Permissible Under Section 80D of the Income Tax Act, 1961

Under Section 80D of the Income Tax Act, the following health-related expenses are eligible for tax deductions:

• Premium paid towards a health insurance policy by individuals and Hindu Undivided Families (HUF)

• Premium paid for top-up health insurance plans

• Preventive health check-ups

• Medical expenses of senior citizens, if they are not covered under any health insurance policies

• Contributions made to the Central Government health schemes

The maximum deductions allowed under Section 80D depend on the age of the insured and the type of expense claimed.

Maximum deductions allowed under Section 80D:

Type of Policyholder	Age	Maximum Deduction (?)
Self, spouse and dependent children	Below 60 years	25000
Self, spouse and dependent children	60 years and above	50000
Parents	Below 60 years	25000
Parents	60 years and above	50000
Hindu Undivided Family (HUF) members	Below 60 years	25000
Hindu Undivided Family (HUF) members	60 years and above	50000
Preventive health check-ups	Any age	5,000 (within overall limit)

Remember that preventive health check-up deductions of ₹5,000 are included within the overall Section 80D limit and are not an additional deduction.

Tax Deduction for Medical Expenses Under Section 80D of the Income Tax Act

Here are the conditions under which medical expenses can be claimed as deductions:

• Senior citizens aged 60 years and above who are not covered under any health insurance policy are eligible to claim deductions for medical expenses.

• Medical expenses must be paid through non-cash modes such as UPI, debit cards, or credit cards.

• The maximum deduction allowed for such medical expenses is ₹50,000 per financial year.

A tax deduction of up to ₹5,000 towards preventive health check-ups can also be availed. This amount is included within the overall Section 80D limit and can be paid in cash.

Is Proof Required For 80D Deductions?

The Income Tax Department does not mandate the submission of proof while filing income tax returns. However, tax authorities may ask for supporting documents for verification at any time.

It is advisable to keep the following records:

• Bills paid for medical expenses

• Copies of health insurance premium receipts

• Diagnostic reports and test results

• Doctor consultation receipts

Your employer may also ask for documents as proof while issuing Form 16.

Maximising Deductions: Key Strategies for Senior Citizens

◦ Choosing plans with wider coverage

Senior citizens can consider plans that offer broader coverage, such as hospitalisation, daycare procedures and pre-existing disease cover. Choosing plans with more coverage may help ensure a better financial safeguard, including access to cashless health insurance.

◦ Making dependent parents part of the policy

If your parents are financially dependent on you, you can include them in your health insurance policy and claim additional deductions. This is especially useful when opting for health insurance for parents, as higher limits apply based on their age.

◦ Submitting deduction claims for preventive health checkups

Preventive health check-ups help detect health issues early. You can claim deductions of up to ₹5,000 for preventive check-ups, even if the payment is made in cash.

◦ Breaking down premiums in case of joint family policies

Having separate health insurance policies for different family members allows each individual to claim deductions separately, which can help maximise overall tax savings for the family.

◦ Making use of the super senior citizen benefit

Section 80D does not provide a separate higher deduction for super senior citizens. The deduction limit of ₹50,000 applies to all senior citizens aged 60 years and above, either for insurance premiums or for medical expenses if they are uninsured.

Medical Deductions for Senior Citizens

◦ Deductions for alternative forms of medicine

Senior citizens who are not covered by health insurance can claim deductions for medical treatment, including recognised alternative systems such as Ayurveda, Homoeopathy, and Unani, provided the expenses meet the conditions under Section 80D.

◦ Deductions for preventive health checkups for dependents

Preventive health check-ups for dependent family members can also be claimed, subject to the overall deduction limit.

◦ Deductions for treating specific diseases

If you’re claiming tax benefits for the treatment of certain serious diseases, those deductions fall under Section 80DDB and not Section 80D.

Eligibility Criteria and Deductions for Section 80D

Section 80D tax deductions are available to individuals and Hindu Undivided Families (HUFs). The amount you can claim depends on the age of the insured person and whether you are claiming for insurance premiums or section 80d medical expenditure.

How to claim a deduction under Section 80D?

Once you know what expenses are eligible, claiming a deduction under Section 80D is straightforward. You just need to follow these steps:

Pay the eligible health insurance premium or medical expense using permitted payment modes.

Keep receipts and supporting documents safely.

Declare the eligible amount while filing your income tax return.

You may use a health insurance calculator to estimate premiums and deductions accurately.

Key Benefits of Section 80D in Health Insurance

Section 80D offers several practical benefits that make health insurance more useful from a tax point of view:

• Helps reduce your taxable income.

• Encourages you to buy and maintain health insurance cover.

• Provides financial support for senior citizens who do not have health insurance.

• Promotes regular preventive healthcare and early health check-ups.

Things To Remember When Availing Section 80D Income Tax Deductions

Before claiming deductions under Section 80D, keep these important points in mind:

• Insurance premiums must be paid using non-cash payment methods such as cards, UPI, or bank transfers.

• Preventive health check-ups of up to ₹5,000 can be paid for in cash.

• The deduction limits change based on the age of the insured person.

• Expenses claimed under Sec 80d medical expenditure are allowed only for senior citizens who do not have health insurance.

What are the Exclusions under Section 80D?

While Section 80D offers useful tax benefits, certain expenses are not eligible for deductions:

• Cash payments made towards health insurance premiums.

• Medical expenses incurred by non-senior citizens.

• Expenses that exceed the prescribed deduction limits.

• Claims made under the new tax regime.

Conclusion

Health insurance acts as a financial safeguard during medical emergencies as well as helping with tax savings. Section 80D allows you to reduce your tax burden while securing coverage for yourself and your family. Understanding the 80d medical expenditure limit and maintaining a proper record of documents can help you claim deductions smoothly and without errors.

Frequently Asked Questions

1. Can I claim deductions for OTC medications?

No. Medicines that you buy over the counter, without a doctor’s prescription, are not covered under Section 80D. So, you can’t claim tax benefits on it.

2. Am I eligible for deductions if I have paid my medical bills in cash?

Cash payments are allowed only for preventive health check-ups, and even then, the deduction is capped at ₹5,000. For everything else, like insurance premiums or medical treatments, you need to pay through non-cash modes such as cards, UPI, or bank transfers.

3. Is there a limit on the maximum deduction I can claim for preventive health checks?

You can claim up to ₹5,000 for preventive health check-ups in a financial year. This amount is part of the overall Section 80D limit and not an extra benefit.

4. Am I eligible for deductions for medical bills paid for my adult children?

No. Section 80D does not allow deductions for medical expenses paid for adult children.

5. Can I claim multi-year premiums?

Yes, you can. If you pay the premium for a multi-year policy in one go, you can still claim deductions, but spread them out year by year, based on the policy duration.

6. Is 80D applicable under the new tax regime?

No. If you’ve opted for the new tax regime, you won’t be able to claim deductions under Section 80D.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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