What Is the Eligibility For Section 80D Deductions Under Income Tax?

No matter how many insurance plans you invest in, your insurance portfolio is incomplete without medical insurance. 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?

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.

Types of health insurance:

  1. Individual health insurance.
  2. Family floater.
  3. Health insurance for Seniors.
  4. Critical Illness 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.

Additional Deduction

  • You can claim a deduction of ₹5,000 every year on expenses related to health check-ups. The limit is inclusive of check-up expenses of all family members, spouse, parents and children. For preventive health check-ups, the payment can be made in cash.
  • Hindu Undivided Family (HUF) is also allowed to claim the deductions under section 80D. For individuals falling under this category, the deduction is around ₹25,000 under 60 years of age. If the insured person is a senior citizen, the deduction will be ₹50,000. 

Take a look at the below 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.

What is the eligibility to avail the deductions under Section 80D?

As discussed above, taxpayers can claim tax deductions on the medical policy 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.

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 and enjoy the tax deduction.