health insurance premium

How Does Section 80D Operate?

In plain English, Section 80D reduces taxpayers’ tax obligations by lowering their taxable income. For instance, the cost of your health insurance premiums for you and other family members will be deducted from your taxable income. It won’t be subtracted from the total amount of taxes you must pay. The amount of tax benefits provided by Section 80D is also based on the insured person’s age. In this regard, Section 80D functions in three different ways: **

Section 80D permits you to deduct up to Rs. 25,000 from your insurance premiums for you, your spouse, and any dependent children. If the parent(s) are younger than 60, there is an additional deduction for their insurance up to Rs 25,000, bringing the total deduction to Rs 50,000.

If the parents are older than 60, a deduction of Rs 50,000 is allowed. You are entitled to deduct a total of Rs. 75,000 in this situation, of which Rs. 25,000 is for the premiums paid for yourself, your spouse, and any dependent children, and Rs. 50,000 is for the premiums paid for any elderly parents.

The maximum deduction allowed under this section increases to Rs. 1 lakh (Rs. 50,000+Rs. 50,000) if the taxpayer and the parent(s) are 60 or older – additional savings of Rs 5,000 when getting annual physicals. ** ##

Health checkups increase the tax savings advantages of Section 80D. Regular preventive health checkups can protect you from lifestyle diseases and aid in the early detection of several diseases. Many renowned hospitals and healthcare providers offer comprehensive packages to help you maintain good health. The good news is that preventive health exams permit you to lower your income tax obligation by Rs 5,000. For example, if you choose to have a health checkup for yourself, your parents, your spouse, or your dependent children during the financial year and you pay a health insurance premium of Rs 25,000 annually for a mediclaim policy, you can deduct a total of Rs 30,000 from your income. Thus, taking advantage of this extra benefit of health insurance provided by Section 80D is a wise way to handle your income tax. **

Now, one might wonder how indemnity-based and defined benefit plans—the two widely used types of health insurancein India—might utilise Section 80D tax benefits on health insurance. To do this, one must comprehend how these two plans operate. An indemnity plan is one kind of health insurance that pays out actual hospitalisation costs up to the predetermined cap under the plan. The sum insured by the policyholder, which is the highest amount of a claim that the insurer will pay out subject to the policy terms, determines the amount reimbursed. **

On the other hand, defined benefit plans are medical insurance offering financial security against predefined events, such as severe illness. In this case, if a predefined disease manifests, the policyholder is paid the total sum insured. However, the advantages of Section 80D apply to both plans.

** Tax benefits are subject to change in prevalent tax laws.

## All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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