Don’t we love getting dual benefits at the price of one? Well, health insurance is one such investment that secures your money against healthcare costs as well as taxes!

Although we do not encourage buying health plans just to avail of tax benefits, you can still enjoy such a perk while safeguarding your insurance requirements.

So, now that you are opting for health insurance, how do you maximize the tax benefits and make the most of it?

In this article, that’s exactly what we shall look at and understand the various tax deductions that you can claim under health insurance:

Overview of Tax Benefits Under Health Insurance

Let’s look at the different tax benefits available under individual and family floater medical insurance under the old tax regime:

Section 80D

The tax benefit under Section 80D of the Income Tax Act, 1961, enables you to claim the premium paid towards the insurance policy.

Here, you can claim the tax deductions for health plans purchased for you and your parents. If you and your parents are below the age of 60, you can claim an amount of ₹25,000 for both per financial year.

Similarly, if you and/or your parents are above 60 years of age, you are eligible for a deduction of ₹50,000.

Furthermore, a tax deduction is also available for preventive health check-ups for both you and your parents. A maximum amount of ₹5,000 can be claimed under Section 80D of the Income Tax Act, 1961.

Section 80DD

Any medical care expenses incurred for the treatment of a dependent with a disability can be claimed under Section 80DD of the Income Tax Act, 1961.

Here, the dependents can be your spouse, children, siblings, or your parents. For a disability of 40% or more, you can claim tax deductions of up to ₹75,000. The tax benefits vary depending on the disability.

Section 80DDB

Tax deductions under Section 80DDB of the Income Tax Act, 1961, are available for the expenses resulting from the treatment of special ailments or disorders.

This includes Parkinson’s disease, renal failure, neurological disorders, thalassemia, etc. If you are below the age of 60, an amount of ₹40,000 can be claimed, whereas, for senior citizens, the deduction goes up to ₹60,000. 

Section 80U

The healthcare costs incurred by the insured with a disability can be claimed under Section 80U of the Income Tax Act, 1961.

Here, if the insured has a 40% disability, then a sum of ₹75,000 can be claimed. In case of severe disability, the tax deductions can go up to ₹1.5 lakh.

How to Maximize Health Insurance Tax Benefits

Now that you have learned the various tax deductions available, let’s understand how you can maximize it by taking your family into account:

Conditions Associated With Health Insurance Tax Benefits

Before you start estimating your health insurance tax benefits, go through some key conditions associated with claiming such deductions:

• The health insurance premium should be paid within the specific financial year
• The premium amount paid should be from the taxable income of the person claiming the deduction
• The insurance premium must not be paid in cash
• A higher amount cannot be claimed even if you have paid a higher insurance premium
• Tax deductions cannot be claimed for the premium paid for friends, in-laws, etc.
• The health insurance payment receipt should be available

Wrapping it Up!

We hope that you have understood how to make the most of the tax benefits available under your medical insurance policy.

Even though many policyholders do opt for insurance to reduce their tax liability, it is advised to prioritize your health no matter what! With health insurance tax benefits in mind, you might end up picking a plan that doesn’t offer sufficient coverage or beneficial features.

Hence, you are not only missing out on insurance coverage but also investing your money in vain.

To make sure you are protected against healthcare challenges and their soaring costs, we recommend you compare various policies online.

Understand the insurance requirements of your dependents and purchase the right medical insurance. And later, you can look at the tax deduction that you need to claim!