Health Insurance and Tax Benefits under section 80D

How can your health insurance premiums save your taxes. Read full blog to understand the eligibility and deductions under section 80d.
January 27, 2025
What is section 80D, its benefits and eligibility

Health Insurance & Section 80D: A Smart Way to Save Tax in FY 2025–26

In today's world of rising medical costs and health risks, buying the right health insurance policy isn’t just good planning - it’s also smart tax strategy. Section 80D of the Income Tax Act offers generous deductions that go beyond the usual ₹1.5 lakh cap under Section 80C.

But to make the most of this benefit, you must understand what qualifies, who is eligible, and how to structure your policies correctly - especially under the old vs. new tax regimes.

Why Health Insurance Is a Must (Tax Benefit is a Bonus)

With medical inflation rising at 12–15% annually, a routine hospitalization in a Tier 1 city can cost ₹3–6 lakhs. If you're unprepared, these costs can derail your savings goals or force emergency withdrawals from long-term investments.

Having a robust personal health insurance plan helps:

  • Avoid dipping into your emergency corpus
  • Reduce out-of-pocket costs in medical emergencies
  • Get access to quality hospitals with cashless benefits
  • Save tax under Section 80D, if you’ve opted for the old tax regime

Why Your Employer’s Cover Is Not Enough

Most corporate group medical insurance policies:

  • Have low sum insured (₹2–5 lakhs)
  • Don't cover parents, maternity, or OPD in many cases
  • End when you resign or retire

Also, if your employer pays the premium, you can’t claim tax deductions. To claim Section 80D benefits, the premium must be paid from your own pocket - and via non-cash modes.

Recommendation: Always buy a separate personal/family floater policy, even if you're already covered at work.

What is Section 80D?

Section 80D provides additional tax deductions for premiums paid towards health insurance, over and above the ₹1.5 lakh deduction allowed under Section 80C.

You can claim it for:

  • Self
  • Spouse
  • Dependent children
  • Parents (whether or not dependent)

Latest Deduction Limits Under Section 80D (FY 2025–26)

Covered PersonsDeduction Limit
Self + Family (all below 60)₹25,000
+ Parents (<60 years)₹25,000
+ Parents (≥60 years)₹50,000
Self + Family (anyone ≥60) + Parents (≥60)₹50,000 + ₹50,000 = ₹1,00,000

Preventive health check-up: Up to ₹5,000, included in the above limits
Multi-year premium: Can be split equally across policy tenure (e.g., 3-year policy = ⅓ per year)

What if Your Parents Are Not Insured?

If your senior citizen parents (age 60+) do not have insurance, you can still claim up to ₹50,000 for actual medical expenses incurred in the financial year.

This is only applicable if they don’t have any health policy.

Who Can Claim?

Eligible Entities:

  • Individual taxpayers (resident or NRI)
  • Hindu Undivided Families (HUFs)

Allowed Payments:

  • Only for self, spouse, dependent children, and parents
  • Payment must be made via non-cash mode (cheque, bank, card, UPI)
  • Preventive health check-ups can be paid in cash

Claiming Deduction When Premium is Split

Let’s say your father and you co-pay the premium for a senior citizen policy. You can both claim deductions separately under 80D - in proportion to what each paid.

Keep receipts showing the split payment clearly
Mention insurer name, policy number, and payment amount in your ITR

Working Children & Siblings - Are They Covered?

  • You cannot claim a deduction for premiums paid for working children (i.e., financially independent)
  • You cannot claim for siblings, in-laws, or other relatives
  • You can claim for dependent children and dependent senior parents

Preventive Health Checkups - What’s Allowed?

Deduction: Up to ₹5,000
Includes costs like:

  • Annual body checkups
  • Blood tests, ECGs
  • Cancer screening, etc.

This can be paid in cash and still qualifies - a rare exception under Section 80D.

Section 80D vs. New Tax Regime

If you have opted for the new tax regime, you are not eligible to claim deductions under Section 80D. All health insurance premiums (even if paid by you) will not reduce your taxable income.

FeatureOld RegimeNew Regime
80D Deduction Allowed?YesNo
Recommended for 80D?YesNo
Best for?Families with dependents and tax-saving investmentsPeople with fewer deductions

How to Claim 80D While Filing ITR

  1. Salaried Employees:
    • Submit premium receipts to your employer during investment declaration
    • Or, claim while filing ITR (if not submitted earlier)
  2. Self-Employed / Consultants:
    • Claim while filing ITR directly
    • Keep proof: payment mode, insurer, policy number, etc.
  3. What Documents to Keep:
    • Premium receipt
    • Insurer's tax certificate
    • Preventive health check-up invoice (if claimed)

Can Term Insurance Be Claimed Under 80D?

Generally, no - term insurance qualifies under Section 80C, not 80D.

Exception: If your term plan includes critical illness or hospital care riders, you can claim the portion of premium related to those riders under Section 80D.

Real-Life Example

Case: Dr. Anita (45) pays:

  • ₹20,000 for a family floater (self, spouse, 1 child)
  • ₹38,000 for her 65-year-old father

Eligible Deduction:

  • Family: ₹20,000 (within ₹25k cap)
  • Father: ₹38,000 (within ₹50k senior cap)

Total claimable = ₹58,000

HUF Taxpayers: What You Can Claim

If you’re filing as an HUF:

  • Up to ₹25,000 for premiums for members <60
  • Up to ₹50,000 for premiums for members ≥60

The claim is made in the HUF’s return, not an individual’s return.

Final Takeaways

  • Section 80D lets you claim up to ₹1 lakh/year for health premiums
  • Buy a separate policy - don’t rely only on employer insurance
  • Opt for the old tax regime if you want to save through 80D
  • Keep your receipts, insurer details, and payment proofs ready
  • Use preventive check-up claim wisely - even if paid in cash

Need Help Choosing the Right Policy?

Finnovate helps you compare policies, pick the right insurer, and claim the right deduction - without any sales pressure.

Book a Free Health Insurance Consultation
Let our team do the legwork - so you can focus on what matters.

Published At: Jan 27, 2025 04:23 pm
657
NSDL CAS Statement
Jun 27, 2024
How to download NSDL CAS Statement

Learn how to easily download your NSDL CAS Statement in PDF format with our step-by-step guide. Follow our instructions to log in to NSDL e-Services, download your account statement, and subscribe for

Read Full
Step-by-Step Guide to CDSL CAS Statement
Jun 27, 2024
Download Your CDSL CAS Statement Easily

Learn How to Download Your CDSL CAS Statement with our step-by-step guide. Easy instructions for accessing your investment details online.

Read Full
Economic analysis of the 2025 India-Pakistan conflict and its implications on India's economy.
May 12, 2025
War Zone: Assessing the Economic Impact of the 2025 India-Pakistan Conflict

Analyzing the potential economic impact of the 2025 India-Pakistan conflict on India's GDP growth, manufacturing sector, and foreign investment.

Read Full
Ola Electric IPO Launch 2024
Aug 03, 2024
What to Know About Ola Electric IPO Launch 2024?

Discover key facts about Ola Electric IPO launching in 2024. Simple guide covering business, financials and investment potential.

Read Full
Demat Depositary (DP), CDSL OR NSDL
Jun 27, 2024
Identifying Your Demat Depositary: NSDL or CDSL

Determine if your Demat Depositary (DP) is NSDL or CDSL easily. Follow our guide to check using broking platforms or Demat account number formats

Read Full
Create Your NSDL Account in 5 Steps
Jul 26, 2024
How to Open an NSDL Account: Easy Guide for Beginners

Easy steps to open your NSDL account online. Follow our beginner-friendly guide to register and start managing your investments.

Read Full
How to Access Your CAMS Mutual Fund Statement
Jun 27, 2024
Download Your CAMS Statement: Step-by-Step Guide

Download your CAMS statement for mutual funds effortlessly. Follow our guide on How to Download Your CAMS Statement for Mutual Funds today.

Read Full
KRN Heat Exchanger IPO 2024
Sep 25, 2024
KRN Heat Exchanger IPO: Financial Insights and Growth Potential

Discover the potential of KRN Heat Exchanger IPO 2024 with industry insights and financial analysis.

Read Full
App

Want to get started ?