Last Updated on Mar 28, 2024 by Harshit Singh
As the financial year winds down, it’s high time we start thinking about tax deductions. While there are many options to reduce your tax burden, Section 80D* of the Income Tax Act offers substantial savings on a crucial expense – health insurance. Let’s dive into how Section 80D works and how you can make the most of it.
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What is Section 80D?
Section 80D of the Income Tax Act in India offers a valuable tax deduction for individuals who invest in health insurance plans. This deduction applies to premiums paid to secure coverage for yourself, your spouse, dependent children, and your parents.
Section 80D also encourages proactive healthcare with a deduction for expenses incurred on preventive health check-ups.
Who is eligible for this deduction?
Individuals & Families
Eligibility: Self, Spouse & Dependent Children
Maximum Deduction: Rs. 25,000
Imagine you and your spouse both have health insurance policies, and you’re both paying the premiums. In this scenario, you can claim a maximum deduction of Rs. 25,000 per fiscal year for the combined premiums you and your spouse pay.
It’s important to remember that this deduction limit is for the combined premiums paid by you and your spouse. So, if one of you pays a higher premium, while the other pays a lower premium, you can still claim the maximum deduction by combining the amounts.
Parents
Eligibility: Self, Spouse, Dependent Children, and Parents
Maximum Deduction: Rs. 50,000
Are you covering health insurance premiums for your parents? Then, you might be eligible for a deduction significantly higher than the usual limits.
While standard health insurance deductions have a cap, you could claim up to Rs. 50,000 annually for premiums paid for your parents. This is a substantial increase in potential savings.
This tax deduction is designed to help individuals who financially support their parents. It eases some of the costs of their care and promotes access to essential healthcare.
Senior Citizen Parents
Eligibility: Self, Spouse, Dependent Children, and Parents (Above 60 Years)
Maximum Deduction: Rs. 75,000
If you are paying health insurance premiums for yourself, your spouse, and your senior citizen parents (above 60 years old), you can take advantage of a significantly higher tax deduction of Rs. 75,000.
You can claim a maximum of Rs. 25,000 as a deduction from your and your spouse’s premiums and a maximum of Rs. 50,000 from your senior citizen parents’ premiums.
If you pay higher premiums for your parents and lower premiums for yourself and your spouse, you can optimise the deduction by combining the figures.
Spouse, and Parents (All 60+) and Dependant Children
In case either you or your spouse is also senior citizen, and you are also covering your senior citizen parents, you can avail max deductions up to Rs. 1,00,000 per annum.
Types of eligible plans under Section 80D
Understanding different types of eligible health insurance plans is essential to benefit from the tax deduction. Here’s a breakdown of the most common options available, helping you choose the right coverage for your healthcare needs and maximise your tax benefits.
Individual Health Insurance Plans
- Coverage: Designed for a single individual, covering hospitalisation expenses, pre/post-hospitalization costs, ambulance charges, day-care procedures, etc.
- Flexibility: You can often customise individual plans with add-on covers like critical illness, personal accident, maternity benefits (for women), etc.
- Best Suited: Young individuals, people without families, or those wanting specific coverage beyond a family floater plan.
Family Floater Health Insurance Plans
- Coverage: A single plan covering multiple family members (usually spouse, children, and sometimes parents/in-laws) under a shared sum insured.
- Flexibility: If any member utilises part of the sum insured, the remaining amount is still available for other members.
- Best Suited: Families seeking comprehensive coverage at potentially more affordable premiums.
Senior Citizen Health Insurance Plans
- Coverage: Tailored to address the specific health concerns of older adults. They often have broader coverage for pre-existing conditions and age-related illnesses.
- Flexibility: May have shorter waiting periods for pre-existing diseases.
- Best Suited: Individuals over 60 years of age who may require more specialised care.
Critical Illness Insurance Plans
- Coverage: Pays a lump sum amount upon the diagnosis of a covered critical illness.
- Flexibility: This payout helps to cover treatment expenses, loss of income due to illness, and other related costs.
- Best Suited: Individuals concerned about the high financial impact of critical illnesses. It acts as a supplement to your regular health insurance plan.
When it comes to health insurance, it’s crucial to choose a reliable and trusted insurance provider. MCHI offers a range of comprehensive health insurance plans that cater to different needs and budgets. The plans cover hospitalisation expenses, pre- and post-hospitalisation costs, critical illness coverage, and more.
Don’t miss out on these tax benefits! If you haven’t already invested in a health insurance policy or are looking to upgrade your coverage, explore the range of plans offered by MCHI. To learn more, visit www.manipalcigna.com
About ManipalCigna Health Insurance Company Limited
ManipalCigna Health Insurance Company Limited is a joint venture between Manipal Group, an eminent player in healthcare delivery and higher education in India, and Cigna Healthcare, a global health services company with over 230 years of experience. ManipalCigna is headquartered out of Mumbai and has 78 branch offices covering significant metros and towns. The company has built a strong multi-distribution network of over 60,000 agents and more than 500 distribution partners across the country. ManipalCigna also has presence in over 400 cities in India through its distribution network and has a network of more than 9,000 hospitals across cities including Tier I, Tier II, and Tier III towns in India. To learn more, visit www.manipalcigna.com
*Tax benefits subject to changes in Tax Laws
ADV/1337/Mar/2023-24
