Tax Benefits with Health Insurance: Unlock Big Savings with Section 80D

Health insurance is essential for your well-being, but did you know it can also be a tax-saving superhero? This article explains how Section 80D of the Income Tax Act empowers you to claim health insurance with tax benefits in premiums.

Understanding Health Insurance Tax Benefits Under 80D

The health insurance tax section or Section 80D of the Income Tax Act lets you claim a portion of your premiums when filing for taxes. This reduces your taxable income.

Individuals under 60 can claim a maximum tax deduction of up to ₹25,000 annually, while senior citizens can claim up to ₹50,000 per year. Taxpayers who pay for their senior citizen parents can claim an additional deduction of up to ₹50,000, making the maximum deduction limit ₹75,000 for those under 60 and ₹1,00,000 for senior citizens. 

Leveraging Health Insurance Tax Benefits

You can claim health insurance tax benefits using a platform like PhonePe. PhonePe offers standard and comprehensive health insurance plans, helping you maximise tax savings through section 80D.

To get health insurance on PhonePe, follow these quick steps:

1. Go to the PhonePe home page, select the ‘Insurance’ tab, and choose ‘Health Insurance’.

2. Select whom you wish to insure, the cover amount & postal code.

3. Select the plan & add to provide nominee details.

4. Present your health declaration.

5. Review the purchase and pay online.

Note on Section 80C:

Make sure you understand the difference between Sections 80C and 80D. An important distinction is that Section 80C offers deductions for investments and expenses, such as PPF contributions and ELSS mutual funds, but Section 80D specifically focuses on health insurance premiums.

Saving taxes with different plans:

• Individual Plans: People aged below 60 can claim a health insurance tax deduction of up to ₹25,000 under Section 80D, when purchasing a health insurance plan.
• Parent’s Health Insurance: You can pay for your parents’ health insurance along with yours, and claim an additional ₹25,000 tax deduction, provided both parents are under 60.
• Senior Citizen’s Health Insurance: Senior citizens (aged 60 or above) enjoy a higher maximum deduction limit for their health insurance premiums than younger individuals. If you or any of your family members are senior citizens, the deduction limit increases to ₹50,000.

Tips for Maximising Health Insurance Tax Benefits under 80D

Keep these considerations in mind when selecting the right health insurance plan to save tax: 

• Consider multi-year insurance plans for upfront deductions or consult a tax advisor for complex situations.
• Family floater plans offer broader coverage at a lower cost, maximising health insurance tax benefits under 80D.
• Utilise preventive health checkups (eligible for up to ₹5,000 tax deductions) to improve health and optimise your tax benefit.

Here’s an example of how health insurance premiums help save taxes:

• Amit, a 32-year-old working professional living in a metropolitan city, buys a health insurance package with a premium ₹22,000 p.a. (that covers him, his wife, and his child). He also buys another plan for his senior citizen parents that costs ₹16,000 p.a. He spends a total premium of ₹38,000 per annum.
• Amit also prioritises annual Preventive Health Checkup (PHC) that costs ₹4,800 (self) + ₹7,200 (parents) = ₹12,000.

Amit’s total health insurance spending: ₹38,000 (premium) + ₹12,000 (PHC) = ₹50,000. He can claim a full ₹50,000 deduction under Section 80D.

Other Benefits of Health Insurance

While the tax benefits on health insurance are a great advantage, these insurance plans also offer a broader range of benefits:

• Combating High Medical Inflation: (Source) According to a 2023 study by the company Plum titled “Health Report of Corporate India 2023” healthcare costs in India are rising at an alarming rate, reaching nearly 14% annually. A health insurance plan helps manage these rising costs and ensures you get access to quality healthcare.
• Cashless Treatment: Most health insurance plans offer cashless hospitalisation facilities at network hospitals. This eliminates the need for upfront payments, allowing you to focus on getting well.
• Broader Coverage: Health insurance plans cover various medical expenses, including hospital accommodation, doctor consultations, surgeries, and medications.

Invest in Your Health and Wealth with Health Insurance

Health insurance is a win-win proposition. It protects your health and finances, providing peace of mind and potentialtax savings. Understanding health insurance tax benefits under 80D and exploring various health insurance plans allows you to create a customised solution that meets your needs and maximises your health coverage and tax benefits. Leverage the convenience of platforms like PhonePe to ensure you make an informed and easy insurance purchase.