What Does Health Insurance Tax Benefit under Section 80D Entail?
Section 80D allows any person or HUF to deduct medical insurance premiums paid in any given year from their total income. The benefit of the deduction is accessible for a health insurance plan for oneself and for a policy to cover a spouse, dependent children, or a parent.
Who is Eligible for the Section 80D Deduction?
Whether you're an individual tax filer or a Hindu Undivided Family (HUF), you're eligible to claim the Section 80D deduction on premiums paid for health insurance policies covering:
- Yourself
- Your spouse
- Dependent children
- Parents
But remember, this deduction is not available for companies, corporations, or for premiums paid on behalf of extended family members like working children or siblings.
What's Not Covered under Section 80D?
While Section 80D offers significant tax benefits, it's important to clarify some exclusions:
- Premium payments made in cash: Only premiums paid through digital or other approved modes are eligible.
- Group health insurance premiums paid by your employer: These are not eligible for individual deductions.
- Premiums paid for non-dependent family members: Only premiums for the eligible categories mentioned earlier are deductible.
Claiming the Section 80D Deduction
Claiming the deduction is relatively straightforward. When filing your income tax return, remember to include the following:
- Health insurance policy details: Policy number, insurer name, etc.
- Premium payment receipts: Ensure they are in your name and paid through approved modes.
- Form 16 (if applicable): This document provided by your employer might already include details of your group health insurance premium.
Most insurance companies provide claim processes that are simple and convenient. You can typically file a claim online, through their website, or by contacting their customer service representatives
Deductions Under Section 80D
Section 80D allows an individual or a HUF to claim a medical expenses deduction under 80D for the following payments:
Scenario 1: You can get a policy covering you, your spouse, and any dependent children. In this scenario, you can deduct the amount you pay for the insurance coverage up to Rs 25,000 every financial year. If the covered individuals under the insurance are under the age of 60, it is applicable. You get a larger deduction of Rs 50,000 if you or your spouse are 60 years old or older.
Scenario 2: You have the option of purchasing a medical insurance plan that covers you and your dependant parents. If your parents are under 60, you are entitled to an extra Rs 25,000 health insurance tax benefit every financial year. Your total deduction for the year will be Rs 50,000 in this scenario.
Scenario 3: You can get a Mediclaim policy covering you, your family, and your elderly parents. If either of your parent is beyond 60, you can claim a deduction of Rs 50,000 every financial year. If you are under the age of 60, the maximum aggregate deduction you may claim is Rs 75,000. If you are also a senior citizen, your total Mediclaim deduction is limited to Rs 1,00,000 (Rs 50,000 + Rs 50,000).
What are the Exclusions in Section 80D?
While a policyholder is eligible to health insurance tax benefits under Section 80D for premiums paid, there are several circumstances in which the deduction cannot be claimed:
- Only the taxpayer, not a third party, is responsible for paying the premium.
- If your employer covers your group health insurance premium, you are not eligible for tax advantages.
- Tax deductions are not available for premiums paid on behalf of working children, siblings, or any other member of your extended family.
- The health insurance tax benefit under Section 80D does not apply to cash payments for premiums.
Conclusion
You can file a claim with your insurance provider, and the insurance company will honour it after performing a simple examination. You may file a claim by emailing them, visiting their website, or contacting their customer service representatives.
Note- Tax benefits are as per current provisions of Income Tax Act, 1961, and are subject to amendments from time to time.
