You are aware of the health benefits of health insurance. But, are you aware of the tax benefits of health insurance? Do you know that you can claim tax benefit for payment for preventive health checkup too?
Are you aware there are exemptions/deductions available for medical expenses incurred under specific cases?
In one of the earlier posts on how to save income tax, I had focused on popular Section 80C investments. In this post, I shall focus on tax benefits of health insurance and other tax relaxations available for specific medical expenses incurred.
1. Premium paid for Health Insurance and preventive health checkup (Section 80D)
You can claim deduction up to Rs 25,000 for health insurance premium paid (for self, spouse and dependent children) during the financial year.
If either you or your spouse is a senior citizen (>= 60 years), the deduction limit goes up to Rs 50,000 (from FY019) per financial year. Till FY2018, the limit for senior citizens was Rs 30,000 per financial year.
You can also claim deduction up to Rs 5,000 for preventive health checkup for self, spouse and children.
However, the total tax benefit for health insurance premium and health checkup is limited to Rs 25,000 (or Rs 30,000) Rs 25,000 or Rs 50,000, as the case may be.
Must Read: Why you cannot rely on Group Health Cover provided by your Employer?
2. Premium paid for Health Insurance and health checkup of Parents (Section 80D)
If you pay health insurance premium for your parents, you can take an additional benefit of Rs 25,000 per financial year. If either parent is a senior citizen, the limit goes up to Rs 50,000 per annum. This rule is applicable from FY2019.
Old rule (Applicable till FY2018): Health insurance premium paid for your parents is also eligible for deduction up to Rs 25,000 per financial year. If either parent is a senior citizen, the limit goes up to Rs 30,000.
The deduction limit includes any payment (up to Rs 5,000) made for preventive health checkup of your parents.
Points to note:
- The payment for health insurance premium cannot be made in cash.
- The payment has to through a banking channel (cheque, demand draft, credit card, debit card, net banking etc).
- The payment for preventive health checkup can be made in cash.
- Health insurance premium paid for siblings is not eligible for deduction.
- If you are paying the premium for a multi-year policy, then you can proportionate deduction in the respective years. (Introduced in Budget 2018. Applicable from FY2019). Explained through an example later in the post.
- Even premium paid for Critical Illness Health Insurance plans and Top-up and Super top-up insurance plans is eligible for deduction under Section 80D.
Illustration (from FY2019)
If you are 35 and your parents are senior citizens, you can claim the maximum benefit of Rs 55,000 Rs 75,000 for health insurance premium and preventive health checkups for self, spouse, children and parents.
Rs 25,000 Rs 25,000 towards health insurance premium and checkup for self, spouse and children. And Rs 30,000 Rs 50,000 towards health insurance premium and checkup for parents.
Here is another example:
For tax benefits for a multi-year policy, let’s try to understand with the help of an example.
Let’s assume you purchase a 2 -year health insurance policy in April 2018 and pay a premium of Rs 36,000.
This policy will be in force until April 2020. This means that the policy will be in force for 3 financial years (FY2019, FY2020 and FY2021).
In this case, you can claim tax benefit of Rs 12,000 (Rs 36,000/3) in each of the relevant financial years ((FY2019, FY2020 and FY2021). Therefore, even though, you have made the payment for a 2-year policy, the tax benefit has to be split over 3 years.
Of course, when you renew in policy in April 2020, you will get the tax benefit for the premium payment in FY2020 and the subsequent years.
3. Medical Expenses for Uninsured Senior Citizens (>= 60 years) (Section 80D)
If you are a senior citizen (>= 60 years) and have not purchased any health insurance, you can avail deduction for medical expenditure incurred up to Rs 50,000 per financial year. This rule is applicable from FY2019.
However, please note the total deduction that can be availed for health insurance, preventive checkup and medical expenses shall not exceed Rs 50,000 (from FY2019).
Note the deduction for such medical expenses can be availed only in case the concerned senior citizen is uninsured (no amount has been paid to keep in force a health insurance plan).
Additional, you can also avail this benefit for payment towards medical expenditure of your parents provided they are senior citizens and have not purchased any health insurance.
Old rule (applicable till FY2018): If you are a very senior citizen (>= 80 years) and have not purchased any health insurance, you can avail deduction for medical expenditure incurred up to Rs 30,000 per financial year. As you can see, till FY2018, the benefit was only for very senior citizens (>=80 years). From FY2019, the benefit has been extended to all senior citizens (>=60 years).
Illustration
You are a very senior citizen but your wife is not. You don’t purchase health insurance for yourself but purchase one for your wife.
The deduction for your medical expenses, health insurance of your spouse (or children) and health checkup is limited to Rs 30,000 Rs 50,000.
Illustration 2
If either of your parents is a very senior citizen and uninsured, you can avail deduction for medical expenses incurred up to Rs 30,000 Rs 50,000 per financial year.
Please understand medical expenses are eligible for deduction only for the parent who is a very senior citizen. As mentioned above, the total deduction for premium payment, health checkup and medical expenses is limited to Rs 30,000 Rs 50,000 per financial year.
4. Treatment cost for specified illness (Section 80DDB)
You can claim a deduction to the extent of Rs 40,000 for medical expenses incurred for specified ailments for self and dependent relatives. You can claim for spouse, parents, children and siblings.
The deduction limit increases to Rs 60,000 Rs 1 lac (from FY2019) in the amount is spent for the treatment of a senior citizen (>=60 years).
The deduction is Rs 80,000 Rs 1 lac (from FY2019) if the treatment cost is incurred for a very senior citizen (>=80 years).
You cannot claim the deduction if you have already claimed reimbursement for the treatment cost under any insurance policy.
You need to attach a certificate from a specialist doctor while filing income tax returns. Certificate from specialist doctors from both private and government hospitals will suffice. The list of specified ailments is provided in Rule 11DD. Major illnesses such as cancer, dementia, chronic renal failure, Parkinson disease, Hemophilia are covered.
5. Deduction for treatment cost of a dependent with disability (Section 80DD)
You can claim deduction up to Rs 75,000 for expenditure towards medical treatment, nursing, training and rehabilitation of a dependent with disability. Dependent can be spouse, parents, children and siblings.
The amount can also include payment towards any scheme for the maintenance of such dependent. In case of dependent with severe disability, the deduction limit is Rs 1.25 lacs. You need to submit a supporting medical certificate. For more details, refer to Section 80DD and Rule 11A of Income Tax Act.
6. Deduction in case of a person with a disability (Section 80U)
If the tax-payer is a person with disability, he/she can claim additional deduction of Rs 75,000 under Section 80U. There is no relation to treatment costs. In case of severe disability, the deduction limit goes up to Rs 1.25 lacs.
7. Medical expenses under Section 17(2)
This benefit was valid only till FY2018. This has been replaced by standard deduction of Rs 40,000 per year from FY2019.
Amount paid (reimbursed) by your employer towards expenses for medical treatment of you and your family is exempt from income tax to the extent of Rs 15,000 per financial year. Family includes self, spouse, children, dependent parents and siblings.
This exemption is not available to self-employed.
This exemption is on actual basis i.e. you are required to submit medical bills to your employer.
Image Credit: Ken Teegardin, 2011. The original image and information about usage rights can be downloaded from Flickr/SeniorLiving.Org
The post was first published on December 24, 2015. Has been updated regularly.
25 thoughts on “Health Insurance Tax Benefits under Section 80D (FY2020)”
Hi Deepak,
Thank You for this wonderful article. I wasnt aware of all these benefits, and you have made things a lot more clearer. I am just a little confused on the preventive health checkup part for Section 80D. What is it exactly? If we fall ill, maybe a flu, and pay a visit to the doctor, can that be termed as a preventive health checkup? Or if we go to a clinic to conduct various diagnostic tests like blood sugar checkup, blood pressure, eye check, etc, is that termed as a preventive health checkup?
Hi Nevlyn,
There is no crisp definition of preventive health checkup in Income Tax Act.
Hence, there is an element of subjectivity.
In my opinion, a visit to a doctor for flu treatment does not come under preventive health checkup. Because it is post-facto. It is not preventive.
However, I think blood pressure, sugar checkup, eye check etc will qualify as preventive health checkup.
Cool, thanks. So while claiming tax exemption against this, all we need to do is to produce the bill for this? Or does it have to be wriiten somewhere on the bill that it should be 80D exempt? Or do we need some other proof?
Yes, you must have the bill with you. Your employer may ask for the same.
Simple receipt should be good enough. I doubt they issue receipts for checkup mentioning the amount is eligible for deduction under Section 80D. So, you do with what you have.
Is doctors prescription is compulsory for claim medical expense for very senior citizen under 80D.
There is no mention about prescription in the Act. However, it is better to hold doctor’s prescription.
Suggest you talk to a Chartered Accountant too.
Hi Nice share about the details of health check up.
I am salaried employee and income tax submission has been completed in my company but i couldn’t claim for preventive health check up, because i was unaware of this clause.
Can i claim during IT returns filing? also, do i need to send receipt to income tax department along with returns, since i havent submitted the proof during IT submission?
Hi Vijay,
You can do it while filing returns.
You don’t have to send the receipt to the income tax department. But keep it with you.
Just in case your return is selected for scrutiny.
Wold suggest take help from a Chartered Accountant or a tax consultant.
Can the checkups done during Pregnancy ,for example, monthly scans/ultrasound, or all other checkups like blood test done during pregnancy are covered under Preventive health check ups? Please suggest.
Nothing is clearly specified as to what constitutes preventive health checkup.
I take it as something which is not on the doctor’s letterhead (prescription).
Checkups during pregnancy are driven by doctors.
In any case, would suggest you claim the amount. Even if the benefit is reversed, which is unlikely, the impact wouldn’t be much.
Thanks a lot Deepesh for the reply.
You are welcome.
Please do share the post with friends and family.
Hello Sir,
Would like to know that if the exemption corresponding to Medical expenses under Section 17(2) can also be claimed at the time filling returns or it can only be availed through the employer.
Dear Gaiman,
The benefit for medical expenses under Section 17(2) can be claimed only through the employer.
1. Can i claim Preventive Health expense for parent if they do not have a Medical INsurance ?
Yes, Up to Rs 5,000.
HI,
I want to know that, can i claim preventive health checkup for me 5000/- and also for parents rs. 5000/- or only up to 5000/- from both.
Rs 5000 each. Rs 10,000 in total
Dear sir,
IF any employer pay tax on non-monetary perquisites on behalf of the empployee u/s 192(1A), can the employer deduct that tax from the salary paid by the employer to employee ? If not whether that tax paid by the employer on behalf of the employee will be a perquisites in the hands of employee which is exempt u/s 10(10CC). I would also like to know that is it optional for the employer to pay tax u/s 192(1A) ?
Suppose employer has deducted TDS on non monetary perquisites along with employees basic salary, can employee claim exemption on the amount paid as tax on non monetary perquisites?
Thanks in advance
Please contact a good Chartered Accountant.
Hi Deepesh – Thank you for various good articles which really helps in our day to day life. I would like to clarify on the point “If you are paying the premium for a multi-year policy, then you can proportionate deduction in the respective years.” Does it mean, making single payment for 3 year policy and claiming the tax exemption for all 3 years but amount is distributed equally among all years and not exceeding the single payment value ?
Dear Ramesh,
If you purchase a 3-year policy in April 2018, it will be in force until April 2021.
Therefore, the policy has been in effect in FY2019, FY2020, FY2021 and FY 2022.
If the premium for the 3-year policy was Rs 30,000, you can claim benefit for Rs 7,500 in each of the years (FY2019 to FY2022)
30,000/4=7,500
As you can see, even though the policy is a 3-year policy, the benefit has to be spread over 4 years. That’s my understanding of the clause added in budget 2018.
Ofcourse, when you renew the policy in April 2021, you will get the benefit for the premium payment in FY2022 and the subsequent years.
Hope the answer clarifies your query.
Thank you Deepesh for your prompt reply.
Thanks Mr. Deepesh. Unfortunately there is plenty of confusion about the period you are referring to. FY 2018 means FY 2017-18, which has just finished? Similarly FY 2019 means period 1.4.18 to 31.3.2019?
Request clarify.
2. Kindly clarify, if we a couple above 60, can undergo expenses for medical examination, tests and treatment/ surgery and claim deduction under section 80 D? Can the man spend for his spouse also, and claim deduction in the Income Tax return? Will the Income Tax software accept this? My CA did not agree.
Dear Sir,
FY2018: April 1, 2017 to March 31, 2018
FY2019: April 1, 2018 to March 31, 2019
If you are uninsured (don’t have health insurance), you can claim tax benefit.
Similarly, if your wife does not health insurance (and is a senior citizen), you can claim tax benefit for any medical expenditure towards her treatment too.