Eligibility for Section 80D Deductions under Income Tax?

No matter how many insurance plans you invest in, your insurance portfolio is incomplete without health insurance policy. Medical emergencies are unforeseen events that can happen to anybody anytime and so one must be ready to face it. If you think you can't afford a health insurance plan, you must be prepared with other ways to meet medical emergencies and pay off the hospital bills.

What Is Health Insurance?

Health insurance is a financial protection plan that covers medical expenses, providing a safety net against unexpected healthcare costs. A health insurance policy not only helps you to get protection against the financial expenses incurred on the treatment but also allows you to get a tax deduction on it under Section 80D. Know more about - How to Claim Tax Benefits on Medical Insurance Premiums?

What Is Section 80D of Income Tax Act

In very simple term we can define Section 80D as - It provides tax deductions to individuals for the premiums paid for health insurance, thereby reducing their taxable income.

Family Members Eligible for Tax Deduction under Section 80D

The health insurance premium paid for the following members of the family is eligible for deductions.

• Self.
• Spouse.
• Dependent Parents.
• Dependent Kids.

As stated above, the deductions under Section 80D are available for policies covering the individual, spouse, dependent children, and parents, providing financial incentives to encourage investment in health insurance for oneself and family members.

Types of Health Insurance Policies Eligible for Tax Deduction under Section 80D -

1. Individual health insurance
2. Family floater health insurance
3. Critical Illness Insurance
4. Personal Accidental Insurance
5. Super Top-Up Health Insurance

What are the deductions under Section 80D ?

Section 80D deductions under income tax  allow you to avail tax benefits specifically on medical insurance. The deductions allowed are:

For Self and Family
• Maximum tax exemption for a taxpayer per year on health insurance premium paid for self, spouse and dependent children is ₹25,000. The individual should be under 60 years of age.
• Maximum deduction section 80D for an individual above 60 years of age is ₹50,000 per year on health insurance premium.
For Parents
• Maximum deduction for an individual on health insurance premium paid on behalf of parents or guardian is ₹25,000 per financial year.
• If your parents or guardian are older than 60 years, then the maximum deduction claimed on health insurance premium is ₹50,000 per year.

Below is the table that shows tax savings you can avail:

Insured	Premium Paid		Tax Deduction
-	Self, family, children	Parents	-
Individual & Parents Below 60 years	25,000	25,000	50,000
Individual & Family below 60 years; Parents above 60 years	25,000	50,000	75,000
Individual, Family & parents above 60 years	50,000	75,000	1,00,000

Example to Know How Tax Deductions Are Applied-

A 36-year-old person takes a family floater insurance plan of ₹20,000. The person takes another policy of ₹28,000 for their parent who is above 60 years of age. In this case, the policyholder will get a tax deduction of ₹20,000 for the family floater plan and ₹28,000 for the parent's insurance policy. The policyholder will get a tax deduction of ₹48,000 in a year.

Conditions and Considerations for Section 80D Tax Deductions

As discussed above, taxpayers can claim Tax Deduction upto ₹ 1,00,000 under Section 80D in a financial year. However, one of the critical things you must remember about paying a health insurance premium to get tax benefit under Section 80D is that you won't be eligible for tax benefit if you pay the premium in cash. So, make sure that you pay by issuing a cheque or other online medium and enjoy the tax deduction.