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Did You Know? Health Insurance Lets You Save up to 1 Lakh on Tax

By Juhi Walia
07 November 2022, 4:14 PM

Even though it is crucial today, when medical expenses are skyrocketing, lifestyle diseases are increasing, and we’re amid a deadly pandemic, a staggering 56 crore Indians are not covered by any health insurance, according to NITI Aayog’s report. Money matters are among the primary reasons most people skip health insurance. Most people are under the impression that getting a policy has no long-term monetary benefit, is an additional cost, and will be a burden financially. However, these are misconceptions, as a policyholder can save up to INR 1 lakh on taxes annually if they own health insurance

Why is It a Mistake to Skip Health Insurance?

Medical emergencies can affect anyone. If it afflicts someone who doesn’t have health insurance, then their suffering is made worse. The sufferer will need to manage their finances in addition to their health. This could put one’s finances in danger, increase stress, and upset one’s financial, life and future goals. If someone is the only earning member in the household, then the family suffers because of the financial burden. 

When people lack health insurance, they rely on their savings or take out loans in an emergency. Therefore, it is a must for your investment portfolio, and the government encourages everyone to buy health insurance by offering tax benefits under Section 80D of the Income Tax Act,1961. 

Know about Section 80D of the Income Tax Act

Health insurance premiums paid in any financial year are deductible from total income for any person or HUF (Hindu Undivided Family) under Section 80D. Top-up health plans and critical illness health insurance are eligible for this deduction, too, which is accessible whether the policy is for yourself, your spouse, dependent children, or your parents. So, you can claim tax benefits on the premium if you buy an individual policy or health insurance family floater plan. 

What Makes One Qualify for Section 80D Deduction?

Only taxpayers in the Individual or HUF category are eligible for tax deductions for medical insurance premiums and senior citizen medical expenses. One can only buy health insurance for parents, self, spouse, and dependent children to be eligible for tax benefits. 

Any other entity cannot claim this deduction. A business or firm, for instance, cannot make a deduction under this clause.

How Can You Claim Tax Benefits?

When you complete your Income Tax Returns (ITR) for the relevant financial year, you must include health insurance as a tax advantage. To get the tax benefits, you must:

  • Choose 80D under the ‘Deductions’ column when submitting your ITR to deduct the cost of your health insurance from your taxable income.
  • Select the option under which you are requesting the deduction, from: 
  • Self and family
  • Self (Senior Citizen ) and family
  • Self and parents 
  • Parents (Senior Citizens)
  • Self, parents and family
  • Self, parents (Senior Citizens) and family
  • Self (Senior Citizen), family and parents (Senior Citizens)
  • Enclose relevant documentation (premium payment receipt) for the Income Tax Department to evaluate.

Tax Benefits for Different Categories of Insured

The amount of tax deduction a policyholder can avail of depends on whether you have an individual plan or family floater and whether you or one more of the insured in a family floater is a senior citizen. Below is what the tax exemption amount will look like:

Category of InsuredTax Deduction (in INR)
Self, Spouse & Children (all under 60 years of age)25,000
Self, Spouse & Children (under 60) + Dependent Parents/Senior Citizens (under 60)25,000 + 25,000 = 50,000
Self, Spouse & Children (under 60 years) + Dependent Parents/Senior Citizens (above 60)25,000 + 50,000=75,000
Self, Spouse & Children ( above 60) + Dependent Parents/Senior Citizens (above 60)50,000 + 50,000 = 1,00,000

Savings on Multi-year Health Insurance

In a long-term or multi-year health insurance plan, the premium amount is fixed for the duration of the policy. So, you can protect yourself from a possible premium hike during renewals and apply for the multi-year plan’s tax exemption each year. One of the biggest advantages of multi-year policies is that they keep you covered for longer tenure and you just don’t have to worry about the annual renewal. 

Exclusions in Health Insurance Tax Benefits

Health insurance tax benefits under Section 80D are not permitted under the following circumstances:

  • Premium is not paid during the fiscal year.
  • The policyholder used cash to pay the premium.
  • A premium payment receipt is not available.
  • Someone else paid for the premium instead of the individual requesting the deduction. In other words, the premium must be paid from the person’s taxable income to qualify for the deduction.
  • Premium was paid for in-laws, siblings, relatives, etc.
  • The claimed deduction does not fit within the Income Tax Act’s permitted limits.


Many don’t consider health insurance important and especially avoid it because it’s an added expense, and they don’t see immediate returns. However, that’s a myopic viewpoint. Health insurance plans save you from excessive medical treatment, but they also benefit you in the long run. If you want instant returns, know what health insurance has tax benefits under Section 80D of the Income Tax Act 1961. Filing for it is simple; you can claim up to INR 1,00,000 annually. 


1. What are the health insurance tax benefits for senior citizens?

Anyone above 60 years of age but under 80 can claim tax benefits under Section 80D. Senior citizens can claim an annual tax exemption of up to INR 50,000 and a tax exemption of up to INR 5,000 on preventive medical checkups.

2. Which modes of payment are acceptable to claim tax benefits?

You can pay by cheque, credit or debit card, and bank draft. Please note: if you pay the premium by cash, you cannot claim any tax benefit. 

3. I have two health insurance plans. Can I claim tax benefits on both?

Yes, you can. It doesn’t matter how many policies you own and submit for tax deductions; the only condition is that you can claim tax benefits only up to INR 25,000 if you are under 60 years; and INR 50,000 if you or your husband/wife are senior citizens. And, if both, you and your dependent parents are above 60 years of age, a total of INR 1 lakh can be claimed.

4. I have health insurance from India, but I live abroad. Am I still eligible for tax deductions on my policies?

Yes, you can claim tax benefits on your policies if you bought them in India. You can get the maximum amount of deductions on a single or multiple policies is INR 25,000.

5. Does the IT Department accept temporary receipts issued by agents?

No, you will not get tax benefits on temporary receipts. Only a receipt that shows the date of premium payment, amount and mode of payment is accepted. 

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