Health Insurance Tax Benefits 2025: Save Big With Section 80D Deductions

Life is unpredictable, and so is your health. One moment, you are fine, and the next, you are burdened with medical bills you never saw coming. That is where health insurance steps in. It protects your savings and supports you and your loved ones by covering OPD expenses, hospitalisation bills, and more. However, did you know that they also offer tax relief? If not, you need to go through Section 80D deductions.

Tax Benefits on Health Insurance

The deduction limit on health insurance premiums is based on the age of the policyholder. Here are the details:

• If you are under 60 and have bought coverage for yourself, your spouse, and dependent children, the maximum you can claim is Rs 25,000 per annum.
• If, in addition to paying premiums for yourself, your spouse, and children, you have purchased a separate cover for your parents who are under 60, an additional deduction of Rs 25,000 is available, making the total tax benefit Rs 50,000.
• If you are below 60 and have purchased coverage for yourself and your family, and also paid premiums for your senior citizen parents, the deduction limit is Rs 75,000 (Rs 25,000 + Rs 50,000).
• If you are over 60 and have also purchased health cover for your parents in addition to your own, the deduction limit is Rs 1 lakh (Rs 50,000 + Rs 50,000).
• If you are a member of a Hindu Undivided Family (HUF) and are below 60 years old, the deduction limit for health insurance premiums is Rs 25,000.
• If you are a member of an HUF and are 60 years old or older, premium payments up to Rs 50,000 are deductible.

What is a Preventive Health Checkup?

A preventive health checkup involves routine medical examinations to detect health issues early, even in the absence of symptoms. It includes tests and consultations to assess overall health and identify potential risks. Under Section 80D, you can enjoy a deduction of up to Rs 5,000 for expenses associated with preventive health checkups for yourself, your spouse, children, and parents. This deduction is part of the overall limit ranging from Rs 25,000 to Rs 1 lakh, depending on the age of the insured and their parents.

Tax Benefit on Multi-Year Health Insurance

If you have paid a multi-year health insurance premium, you can still claim a tax deduction under Section 80D, but only for the relevant years. Suppose you buy a 3-year health policy in 2024 and pay Rs 60,000 upfront. You cannot claim the full amount in one year. Instead, you can claim Rs 20,000 per year for three years as long as the policy is active. This ensures the benefit is spread evenly. The annual deduction limit of Rs 25,000 if you are below 60 and Rs 50,000 if you are a senior citizen still applies. So, even if you pay at once, your tax benefits continue year by year.

Key Things to Remember to Enjoy Tax Benefits Under Section 80D

To enjoy tax perks on health insurance, keep the following pointers in mind:

• You can claim tax benefits only if the premiums are paid in any mode except cash.
• Premium paid for dependent children qualifies for the deduction. However, if your child is earning or financially independent, their insurance premium cannot be claimed under your Section 80D benefit.
• Premiums paid for top-up or super top-up health insurance plans also qualify under Section 80D. This insurance offers additional coverage beyond your existing policy's limit. It activates only after you exhaust a fixed deductible amount. The tax benefit is within the same age-based limit.
• If you have bought a critical illness add-on or a standalone critical illness insurance, the premium paid for it is eligible under Section 80D.
• Premium paid by your employer for group health insurance is not eligible for tax benefit under Section 80D.
• Section 80D deductions are available only under the old tax regime.
• Contributions to CGHS or other notified schemes are eligible for deductions up to Rs 25,000. However, if you make a contribution on behalf of your parents, it will not qualify for this deduction.
• If you are over 60 and a resident without a medical insurance plan, you can get a deduction of up to Rs 50,000 for medical costs. Although the Income Tax Act does not specifically define 'medical expenditure,' it includes costs such as consultation fees, pharmacy charges, and medical aids for disabilities.

Conclusion

Health insurance not only safeguards your well-being but also helps you save significantly on taxes under Section 80D. Depending on your age and who you are covering, yourself, your family, or your parents, you can claim deductions ranging from Rs 25,000 to Rs 1 lakh. Even preventive checkups, top-up plans, and multi-year policies offer tax benefits. Just make sure you follow the rules, stay within the limits, and opt for the old tax regime to enjoy all the savings. Make sure you keep all the documents handy and save them for future reference to avoid any discrepancies.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.