How to Claim Tax Benefits on Health Insurance Premiums?

.While people in their 20s and 30s now understand the importance of health insurance, many of them continue to be ignorant about it. They believe that health insurance is meant for the old-aged, and it is an unnecessary investment.  

But people as young as in their 20s now suffering from severe health conditions like cholesterol and diabetes. It is therefore important that one should consider purchasing health insurance as early as possible. To further encourage people, there is an income tax deduction for medical insurance premiums under Section 80D of the IT Act. 

While the primary reason to purchase a health insurance policy should always be to protect your health, the tax deduction is an excellent additional benefit. Before claiming for tax benefits on health insurance premiums, you need to seek clarity on the following points: Invest in Right Health Insurance Policy and Save taxes

1. Who can claim tax deductions on health insurance?

2. What is the maximum tax deduction limit?

3. How can this deduction be claimed?

Who is Eligible to Claim Tax Deductions on Health Insurance?

Under Section 80D, you are eligible for tax deductions on premiums paid towards a health insurance policy if-

• You are an individual who has purchased health insurance for yourself, your spouse, dependent children, or parents.
• You are a member of a HUF (Hindu Undivided Family)

Tax Deductions Available for Health Insurance

Here is how much you can claim in deductions if you have purchased health insurance for yourself and your parents-

• Age Below 60 Years (Proposer and Parent)

If you are purchasing an individual health plan for yourself and your age is below 60 years, you can claim a tax deduction of up to Rs. 25,000 in a financial year on your mediclaim premium. If you are also purchasing health insurance for a dependent parent who is below 60 years, you get an additional deduction of Rs. 25,000. 

• Age Above 60 Years (Parent)

If you have purchased an individual health plan for your dependent parent who is above 60 years, the deduction limit is increased to Rs. 50,000 from Rs. 25,000. 

So, if your age is below 60 years and the age of your dependent parent is above 60 years, and you purchase an individual policy for yourself as well as your parent, you can claim a tax deduction of up to Rs. 75,000. Here, Rs. 25,000 is the deduction for your health insurance premiums and Rs. 50,000 is for the premiums paid for your senior parent.

• Age Above 60 Years (Proposer and Parent)

If both you and your dependent parent are above 60 years, the maximum medical premiums tax-deductible limit will be Rs. 1 lakh. 

As your age is above 60, you will get a deduction of Rs. 50,000 and the same will be available for your dependent parent for whom you have purchased a health insurance policy.

Insured	Premium paid for health insurance - Self (Rs)	Premium paid for health insurance - Parents (Rs)	Total deduction under 80D (Rs)
Self (including spouse, children) under 60, and parents also under 60	25,00	25,000	50,000
Self below 60, but parents above 60	25,000	50,000	75,000
Parents and individual both above 60 years	50,000	50,000	1,00,000

How to Claim Tax Deduction on Health Insurance Premiums?

Tax benefits on health insurance can be claimed at the time of filing income tax returns. Here are the steps you must follow-

1. When you fill your ITR form, there is a ‘Deductions’ column where you can select ‘80D’ for claiming deductions on health insurance premium

2. A drop-down menu will now be available so that you can select the condition under which you are claiming the deduction. There will be seven options, and you can choose the one under which you are claiming the deduction. The options are as follows-

⮚ Self and family

⮚ Self (Above 60 years) and family

⮚ Parents

⮚ Parents (Above 60 years)

⮚ Self and family with parents

⮚ Self and family with parents above 60 years

⮚ Self (Above 60 years) and family with parents above 60 years

You can now attach the supporting proofs and documents so that the IT department can verify your deduction. Take note that the tax deduction on medical insurance premium can only be claimed if you have paid the premiums through net-banking, credit/debit card, a cheque, or a draft. Premiums paid in cash are not eligible for tax deductions. Also, you need to have the supporting documents and proofs to claim the deduction successfully. 

When Can You Claim Tax Deductions of Health Insurance?

The tax deductions on health insurance premiums can only be claimed for a particular financial year. For instance, if you are paying the premium for fiscal year 2023/24, tax deduction can only be claimed while filing ITR for 2023/24.

No deductions can be claimed for premiums that you have already paid in the last financial year or will be paying in the following financial year.

Taking Advantage of Tax Deductions on Health Insurance

You are eligible for claiming the tax benefits as per the limits and conditions discussed above. 

Always file your ITR at least a few weeks before the due date to avoid the last-minute rush. This will ensure that you have adequate time to provide accurate details of your health insurance and claim the applicable deductions in a hassle-free manner.

Find out the detailed information on the importance of health insurance plans!