Claiming Medical Expenses Under Section 80D

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

Claiming Medical Expenses Under Section 80D

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. Firstly, you must have the relevant proof (receipts of medical expenses, premium paid, etc.) while filing your Income Tax Return (ITR). 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 make investments in order to save taxes, you will look at the various sections of the Income Tax Act to see where you can make maximum savings. Section 80D is one of the most beneficial ways of getting a tax rebate, as this tax benefit is given on premiums paid for medical insurance policies. It’s a great investment as you get to secure yourself and your loved ones financially in case of medical emergencies.

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

Under 80D of the Income Tax Act, the following expenses relating to health are eligible for tax deductions:

1. Premium paid towards health insurance policy by individuals and Hindu Undivided Families (HUF)

2. Premium paid for top-up healthcare plans

3. Preventive health check-ups

4. Medical expenses of senior citizens if they are not covered under any health insurance policies

5. Any contributions made to Central Government health schemes

Here is a table showing the maximum deductions allowed under Section 80D for premiums paid towards health insurance by individuals and Hindu Undivided Families (HUFs).

Type of Policyholder	Age	Max. tax deductions under Section 80D
Self, Spouse and Dependent Children	Below 60	₹25,000
Self, Spouse and Dependent Children	Above 60	₹50,000
Parents	Below 60	₹25,000`
Parents	Above 600	₹50,000
HUF Members	Below 60	₹25,000
HUF Members	Above 60	₹50,000
Preventive healthcare expenses *	Below 60	₹5,000
Preventive healthcare expenses *	Above 60	₹5,000

About preventive healthcare expenses:

• This is an optional expense you can claim if your actual premium payment is less than the maximum tax deductions under any of the categories mentioned in the above table.

• Currently, the Income Tax Act of 1961 doesn’t require you to submit any preventive health checkup 80D proof to claim deductions. However, it is a good idea to keep all the records for future investigation, if any.

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 under Section 80D of the Income Tax Act.

• Senior citizens (aged 60 years and above) who are not covered by any health insurance policy are eligible for tax deductions for medical expenses.

• Section 80D medical expenditure for senior citizens is available only if the payment has been made through a non-cash mode (credit cards, debit cards, UPI payments and more).

• The maximum deduction senior citizens can claim for their medical expenses under this section is ₹50,000 annually.

A tax deduction of Rs 5,000 towards preventive health check-ups can also be availed, but this should be within Rs. 50,000 ceiling. The payment for preventive check-ups can be made in cash.

Know More: Tax Benefits on Preventive Health Check-Ups

Is Proof Required For 80D Deductions?

The Income Tax Act Department does not mandate the submission of proof to claim tax benefits under Section 80D, but it is advisable to keep a record of all the expenses incurred during the year, such as health insurance premium receipts, medical bills, medical expenses, test reports, etc.

Tax authorities may ask you for records of your claims in case any issues arise in tax calculations. Hence, though the law doesn’t require it, you should maintain the following documents for future use:

• Bills paid for your medical expenses

• Copies of your premium payment receipts for that year

• Laboratory reports, scans, X-rays and other tests

• Receipt of payment for doctor’s consultation charges

Also, your employer may ask you for documentary evidence of all the deductions while issuing Form 16 to file your tax returns. Secondly, if you are filing tax returns on your own and are not dependent on Form 16, keeping a record of the bills will make it easier for you while availing of tax deductions.

Maximising Deductions: Key Strategies for Senior Citizens

Senior citizens who want to maximise their deductions under Section 80D can follow these tips:

• Choosing plans with wider coverage

One of the best tips to save your taxes is to choose health insurance plans offering comprehensive coverage. The more treatment options and inclusions of the plan, the higher the premium amounts you can claim deductions for.

Some examples of wider coverage that senior citizens can opt for include coverage for hospitalisation, pre-existing diseases, preventive care, and daycare expenses. As the coverage starts to increase, senior citizens can claim higher deductions on their increased premiums.

• Making dependent parents part of the policy

Are your parents dependent on you financially? You can include them as dependents in your health insurance plan as well. You can claim deductions for the premiums you pay for their health insurance.

When you add the insurance plan’s coverage to your dependent parents, you can claim additional tax deductions of up to ₹25,000 or ₹50,000, based on their age. Some insurers may ask you to submit proof to show your parents are financially dependent on you. Some valid proofs of financial dependency that insurers accept are documents showing a shared living arrangement and your bank statements showing regular money transfers to your parents’ account.

• Submitting deduction claims for preventive health checkups

Preventive health checkups are part of most health insurance plans for senior citizens. This helps detect issues, if any, early and ensures they get proper treatment on time. However, most people don’t know they can save taxes by claiming deductions for the costs spent on these preventive checkups.

• Breaking down premiums in case of joint family policies

Having separate health insurance policies for each member allows you to split and pay the premiums individually, even if you live in a joint family. This way, every member can claim deductions on the premium paid, thereby maximising the tax savings of the entire family.

• Making use of the super senior citizen benefit

Super senior citizens (people aged 80 and above) are eligible for higher deductions under Section 80D. Hence, when choosing health insurance plans, choose the right policy applicable to the elderly members of your family to maximise your deductions.

Medical Deductions for Senior Citizens

When claiming medical deductions for senior citizens, you should remember the following points:

• Deductions for alternative forms of medicine

Some senior citizens may not be comfortable with allopathy and may seek treatment in alternative forms of medicine, such as Ayurveda, Homeopathy, Unani, etc. Deductions are also available for their medical treatment in these fields, thereby broadening the scope of treatment for senior citizens.

• Deductions for preventive health checkups for dependents

In most cases, you can claim deductions for preventive health checkups for yourself and your dependents as well. This is why it is important to include them in your plan.

• Deductions for treating specific diseases

You are eligible for deductions for treating certain critical illnesses. Check your critical illness insurance plan to know which diseases are covered and save taxes accordingly.

Conclusion

Health insurance provides financial protection during a medical crisis. It is also a great tax-saving instrument. As per Sec 80D of the Income Tax Act, an individual can save up to Rs 1 lakh on health insurance for self, spouse, dependent children and parents. If senior citizens do not have health insurance, they can claim a deduction for their medical expenses. While buying a health insurance policy, do thorough research, compare the plans, calculate the premiums using the health insurance premium calculator, which is available online and take the final call.

Frequently Asked Questions

1. Can I claim deductions for OTC medications?

Over-the-counter medications are not covered under Section 80D deductions.

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

A tax deduction of Rs 5,000 towards preventive health checkups can also be availed and payment can be made in cash.

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

A tax deduction of up to ₹5,000 in a financial year can be claimed for preventive health check-ups. However, this is included in the overall Section 80D limit of ₹25,000 for persons under 60 and ₹50,000 for senior citizens.

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

As per Section 80D, medical bills paid for adult children cannot be claimed as deductions.

5. Can I claim multi-year premiums?

Yes, but you cannot claim deductions for the entire premium amount paid upfront on multi-year policies. The premiums must be divided proportionally across the years for which the policy is purchased. You can then claim deductions accordingly, subject to the maximum limits allowable under Section 80 of the Income Tax Act, 1961.

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

No, 80D deductions are not available for individuals and HUFs under the new tax regime.

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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