Tag: Health Insurance

Tax Benefits of Health Insurance and medical expenses

Tax Benefits of Health Insurance and medical expenses

As a first step in your financial plan, you must ensure that you have adequate health insurance for self and family members. Buying health insurance will serve the purpose of protecting financial instability and give access to quality health care.

Premium paid for health insurance also enjoys certain tax benefits in income tax act 1961 that you must know to reduce your tax liability.

Section 80D – Income tax benefit on health insurance

While calculating your taxable income for a financial year, premium paid during that year for the health insurance policy can be claimed as tax deduction under section 80D of income tax act 1961.

Please remember that tax benefit available under section 80D is over and above the limit of Rs 1, 50,000 as specified under section 80C.

In order to claim tax deduction under section 80D, you need to pay the premium either through a cheque or credit card as cash payment does not qualify for tax deduction under this section.

Under section 80D, you can avail tax deduction up to Rs 25,000. If its for a senior citizen then tax deduction will be up to Rs 50,000 (FY 18-19).

Section 80DD – Tax deduction on health insurance premium paid for handicapped relative

Under section 80DD, you can avail tax benefits if premium paid for health insurance is for a handicapped dependent relative.

Deduction can be claimed up to Rs 75,000 if the handicapped dependent’s disability is between 40% and 80%. In case of more than 80% disability, tax deduction limit is Rs 1,25,000.

Section 80DDB – Tax benefit for medical treatment of a relative suffering disease

Medical expenses incurred by you on the treatment of your relative suffering from a specified diseases like AIDS, Parkinson’s, chronic renal failure, malignant cancers, thalassemia, haematological disorders, dementia and other specified neurological diseases can claim tax deduction of Rs 40,000 under section 80DDB.

For a senior citizen and very senior citizen, tax deduction limit is Rs 1,00,000 (FY 18-19).

Section 80U – Tax Deduction for Self Suffering from disability

If you are suffering from any disability then tax deduction can be claimed under section 80U of income tax act 1961. If your disability is not less than 40% then tax deduction of Rs 75,000 can be claimed. If disability is 80% or above then you can claim a higher deduction of Rs 1,25,000.

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Why health cover claims get rejected?

Why health cover claims get rejected?

Pre-existing disease: Medical conditions that exist before obtaining the health insurance policy are not covered from day one. A waiting period of up to 4 years can apply for such conditions.

Policy exclusions: Some illnesses covered only after a few years. Standard exclusions are cost of spectacles, dental and cosmetic surgeries, expenses for diagnosis and treatment relating to pregnancy etc.

Gap in renewal: The health insurance policy is renewable provided you pay the premium within 15 days of expiry date after which it lapses. During this gap period, coverage is not be available.

Policy coverage: The health insurance policy will mention sub-limits under heads such as room rent, consultancy fees, ambulance charges etc. and amounts over which costs will not be covered.

Incorrect information: Any wrong information given at the time of purchasing the policy if making a claim when discovered at a later stage could lead to claim rejection.

Tax Deduction for Health Insurance Premium

Tax Deduction for Health Insurance Premium

  1. Investments made towards payment of health insurance premiums qualify for a tax deduction under Section 80D of the Income Tax Act. These limits are for FY 2017-18.
  2. Individual assessees can claim deduction for premiums paid towards health insurance of self, spouse, parents and children. HUF can claim deduction for insuring the health of any member of the HUF.
  3. The deduction that can be claimed by an assessee is up to Rs 25,000 for health insurance premium paid for self, spouse and dependent children if under the age of 65 and Rs 30,000 if above the age of 65 years.
  4. A further deduction of Rs 25,000 could be claimed, for buying health insurance policy for parents of the assessee. It is Rs 30,000 if either of the parents is a senior citizen.
  5. The service tax paid on the medical insurance premium is not allowed as a deduction.
Deduction available under section 80D For FY 17-18