Section 80D Deductions - Tax Benefits on Medical Insurance
Medical Insurance is a type of insurance that provides protection against loss due to sudden illness. If you are insured and you fall sick, the Medical Insurance provider bears the expenses. Today, Medical Insurance has become very popular with the rise in medical expenditure and threat of various diseases. You can claim tax benefits under Section 80D of the Income Tax Act by paying the premium for your health Insurance.
To learn about the tax benefits available for Medical Insurance premium, you must understand tax treatment under the following three scenarios:
- Deductions under Section 80D if the medial insurance premium is paid for yourself, spouse or children (collectively referred to as family)
- Deductions under Section 80D if the medial insurance premium is paid for dependent parents
- Deductions under Section 80D if the medial insurance premium is paid for your family and parents (both)
1) Section 80D: Tax Benefits on Medical insurance premium paid for self, spouse or children (collectively referred to as family)
If you have paid Medical Insurance premium for any member of your family, then you can claim deduction under Section 80D as per the limits prescribed below. Family refers to self or your spouse or children. Note that the insurance should not be paid in cash and hence the deduction under Section 80D would not be considered.
Eligible amount of deduction is lower of the following:
- Actual amount of Medical Insurance premium
- Rs. 15,000 (Rs. 20,000, if the age is more than 60 years)
Also, tax benefits under Section 80D are available only for dependent children. Thus, tax benefits under Section 80D are not available if the premium is paid for your immediate family member (brother or sister). Similarly, if Medical Insurance premium is paid for your child whose age is above 18 years and is employed, you will not be entitled for any tax benefits. But, if the child is above 18 years of age and a student, you can claim the deduction under Section 80D.
Example
Karthik’s age is 45 and he pays health Insurance of Rs. 17,000 for self, spouse and two children. He will be allowed a deduction of Rs. 15,000 only although he has paid Rs. 17,000 as the maximum deduction allowed under section 80D is Rs. 15,000 in this case.
2) Section 80D: Tax Benefits on Medical Insurance paid for your Parents
You are allowed deduction under Section 80D if you have paid Medical Insurance for your parents. This deduction is in addition to the deduction allowed for your family. To claim the deduction under Section 80D, the premium should not be paid in cash.
Eligible amount of deduction is lower of the following:
- Actual amount of Medical Insurance Premium
- Rs. 15,000 (Rs. 20,000, if the age of parent is more than 60 years)
Example
Karthik’s age is 30 and he pays health Insurance of Rs. 21,000 for parents (Karthik’s father is above 60 years). He will be allowed a deduction of Rs. 20,000. As his father is above 60 years, he is eligible to claim higher deduction in this case.
3) Section 80D: Tax Benefits on Medical Insurance premium paid for yourself and for your parents
In many instances, you pay Medical Insurance premium for yourself and parents. In such cases, you are entitled for an extended deduction which is derived by adding both the eligible limits. That is, maximum limit if premium is paid for (yourself + parents).
Eligible amount of deduction: Refer the following table to know the eligible limit if the medical premium is paid for both cases:
| Case |
Max. Eligible amt of deduction for Medical Insurance premium paid in respect of |
Maximum Eligible Deduction under Section 80D (A+B) |
| Self, Spouse & dependent children (A) |
Parents (B) |
| If your age and parent’s age is less than 60 years |
Rs. 15,000 |
Rs. 15,000 |
Rs. 30,000 |
| If your age is less than 60 year and your parents age is 60 years or more |
Rs. 15,000 |
Rs. 20,000 |
Rs. 35,000 |
| If Your age and as well as your parents age is 60 years or more |
Rs. 20,000 |
Rs. 20,000 |
Rs. 40,000 |
Example
Karthik pays health Insurance of Rs. 20,000 for self, spouse, and children. In addition, he pays a health Insurance premium of Rs. 22,000 for parents whose age is above 60.
Karthik will be allowed following deduction under Section 80D:
- Rs. 15,000 for Medical Insurance for self, spouse, and children. Although, the amount paid is Rs. 20,000, the deduction allowed will be limited to 15,000 Rupees as per Section 80D.
- Rs. 20,000 for Medical Insurance for Karthik’s parents as they are above the age of 60 years.
Hence, the total deduction allowed to Karthik is Rs. 35,000.
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