Can Medical Expenses be Claimed under Section 80D?

2022-07-17

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You can now not only safeguard yourself against medical costs for hospitalization but also benefit by saving taxes on premiums paid. A health insurance plan gives you this dual advantage because the premiums paid are deductible under section 80D of the Indian Income Tax Act. What’s more, you can include even the premiums paid for your family and dependent parents. The icing on the cake? This is in addition to the deductions claimed under section 80C of the Indian Income Tax Act.

For example, if you pay Rs.25,000 each year towards the premium for your Mediclaim policy, you can deduct this amount from your taxable income. Say, your annual taxable income is Rs.5,00,000, your net taxable income after deducting the premium, paid towards your Mediclaim policy, would be Rs.4,75,000.

Amount of Deduction Available Under Section 80D

You can claim a deduction of up to Rs.25,000 for health insurance cover for yourself, your spouse, and your dependent children. Also, you are eligible to claim a deduction of an additional Rs.25,000 paid towards health insurance for your parents if they are below 60 years of age. In case you and your parents are both above 60 years of age, then you can claim a deduction of up to Rs.50,000 each, i.e., a total of Rs.1lakh!

Family	Deduction for Health Cover Premium	Deduction for Medical Expenses	Max. Deduction u/s 80D
Self, spouse (aged below 60) and dependent children (aged below 25)	Up to Rs. 25,000	Up to Rs. 5000	Rs. 25,000
Parents, In-laws (aged above 60 & whether dependent or not)	Up to Rs. 50,000	Up to Rs. 50,000 (only if medical insurance is not available)	Rs. 50,000
Self or Spouse aged 60 years or more	Up to Rs. 50,000	Up to Rs. 50,000 (only if medical insurance is not available)	Rs. 50,000

Table: Section 80D deductions based on age and expense

Let us consider a few scenarios for better understanding. If you are 40 years old and are paying Rs.35,000 towards premiums for your family and Rs.45,000 for your father who is 70 years old. In this case, you can claim a deduction of Rs.25,000 for your family and Rs.45,000 for your father which works out to a total of Rs.70,000. Alternatively, if you are paying Rs.18,000 for your family and Rs.55,000 for your dependent parents, you can claim a deduction of up to Rs.18,000 and Rs.50,000 respectively.

There is also an incentive for underdoing preventive health check-ups. Rs.5000 spent for health check-ups for you, or your family is also eligible for deduction under section 80D although under the total upper cap of Rs.25,000 or Rs.50,000, as applicable.

How to Buy a Health Insurance Policy?

Health insurance policies are offered by several public and private sector companies. You can apply for a policy by either logging on directly to the company’s websites or through vertical portals such as policy bazaar. Surfing online helps you compare and purchase the best tax saving plan.

You can also contact an insurance advisor or personally visit the nearest branch. This helps if you are more comfortable purchasing after meeting an authorized representative face to face. Needless to say, you can also pay by card at the branches.

Things to Consider While Buying Health Insurance for Claiming Under Section 80D

However, before you buy a policy, it is advisable to go through these broad guidelines so that you get a tax-saving insurance policy that best suits your needs as well.

1. Type of Policy

If you are frequently travelling abroad, you may want to consider a plan that offers coverage across an international network of hospitals. Some policies cover pre-existing illness, although, after a time gap. In case you want a pre-existing illness covered you may look at such options. Some policies offer add-on riders to cover critical illnesses by giving away lump sum payments on the detection of such diseases.

2. Cashless Hospitalization

In cashless hospitalization, the hospital seeks pre-approval from the insurer at the time of admission. But you can avail of this only if the hospital is listed in the insurer’s network. This is a big relief for middle-class citizens as huge amounts need not be arranged for treatment. If you get yourself treated in a non-networked hospital, you must pay and claim later. So, lookout for a policy that offers cashless hospitalization in some hospitals in your area. This can help at least for planned hospitalizations.

3. Check Exact Coverage Details

Each policy has its specifications on what is covered and how much is covered. Some policies require co-payment which means the insurer will not bear 100% of the bill. You have to pay some portion. There could be maximum limits on room rent, ambulance charges, medicines, pre-hospitalization expenses, post-hospitalization expenses, etc. Better to check each clause before signing up.

4. Cover for Terminal Diseases

Terminal diseases are illnesses that can spread rapidly and are life-threatening. For example, cancer, heart failure, etc. Treatment for these diseases usually needs a huge amount of money and may not always lead to hospitalization.

Thus, different health coverage is needed to cover such diseases. This health cover, also known as critical health insurance, pays the benefit amount in a lump sum after diagnosis of any of the covered illnesses.

5. No Claim Bonus or Increasing Cover

Insurer's reward policyholders when no claim is made in a year. The reward may be offered in multiple ways. Some insurers may reduce the premium in the subsequent year, whereas most others may increase the sum insured without increasing the premium.

Increased sum insured helps you in two ways, first in keeping up with the inflation, and second saving you from having to buy another health insurance. Even critical health policies like Health First have the option of increasing sum assured so that you can stay covered against inflation.

If you don’t have a health plan, buy it now. The right time to buy a health insurance is now. Health insurance policies help tide over the stress caused by expensive medical treatments. Taking care of one’s health is no doubt extremely important. But tax-saving instruments make it light on the purse and also take care of both the financial as well as physical health.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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