Keeping health conditions in check is crucial to avoid complications in old age when people are more vulnerable to diseases. Given the high medical costs today, an inclusive health insurance plan could prove a lifesaver against the exorbitant costs of hospital and doctor consultations. 

These days, insurers also provide coverage for preventive health check-ups, no-claim bonuses and discounts on policy renewals. The income tax department also provides various tax benefits for health insurance expenses incurred by senior citizens or other family members.

Here is how one can save taxes with medical insurance:

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Section 80D Of Income Tax Act: 

Individuals aged 60 and above can avail of tax benefits of up to Rs 50,000 on medical insurance payments under section 80D of the Income Tax Act, 1961. Children paying health insurance premiums for their senior parents can also avail of Rs 50,000 tax deduction, besides a rebate of Rs 25,000 for their individual health insurance. A subscriber can claim tax benefits for insurance premiums for themselves, spouse, children, and parents. The maximum deduction limit is Rs 1 lakh, if senior citizens buy health insurance for themselves and their senior parents.

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Preventive Health Check-Up:

The Income Tax Department also provides tax deductions of Rs 5,000 for preventive health check-ups. However, it is adjusted within the Rs 50,000 limit for senior citizens.

Multi-Year Policy Payment:

Senior citizens can pay their premiums for one, two or three years at once to avail of hefty discounts from insurers. In that case, they can be claim deductions for the proportionate amount every year. For example, suppose they pay a premium of Rs 80,000 for a two-year policy. In that case, they can claim tax deductions of Rs 40,000 for each year under section 80D.

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Section 80DDB of Income Tax Act:

Under Section 80DDB of the Income Tax Act, senior citizens can avail of a tax benefit of up to Rs 1 lakh in a financial year for any specified disease. To claim this deduction, they must furnish proof such as a certificate from the doctor who supervised the treatment.

Post Covid-19 pandemic, people’s awareness about health insurance has notably increased, although it is far from the desired levels. Nowadays, insurers also provide coverage for serious diseases like cancer, dementia, chronic renal failure, AIDS, etc., where the treatment cost is significantly higher.  

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Points To Note:

The subscriber can choose all available payment modes except for cash to avail of tax deductions on insurance premiums. However, for preventive health check-ups, cash payments are also allowed for tax rebates. While filing tax returns, the income tax department will not ask for the receipts for preventive health check-ups, but it is always better to keep records of all expenses.

The tax benefits are available only in the old tax regime. However, one shouldn’t consider health insurance only for tax benefits. Although it is a major motivating factor, health insurance should be primarily to protect you and your family financially during health emergencies.