Health Insurance Tax Benefits - A detailed guide

The rise in the number of various lifestyle diseases along with the inflating prices of healthcare has made it imperative that you secure your and your family's health. Apart from adopting a healthy lifestyle, availing a Health Insurance policy is a recommended way to do so. A Health Insurance policy acts as an umbrella cover for your financial needs in case of a medical emergency.

Additionally, along with taking care of your medical expenses, a Health Insurance policy also helps you save taxes. The premium on your Medical Insurance policy is considered for tax deductions under Section 80D of the Income Tax Act, 1961. Hence, if you buy a Health Insurance from a reputed Health Insurance provider, say HDFC Bank, you stand to enjoy a host of tax benefits along with insuring your medical spends.

The premium amount paid towards the Health Insurance of you and your family including your parents can be claimed as a tax deduction from your taxable income. However, the maximum deduction amount you can claim is based on your age.

Let's understand the different provisions of the tax benefit available under Section 80D through these examples.

Provision 1

The maximum deduction limit allowed for you including your spouse and children is Rs 25,000. Moreover, you can claim a deduction of up to Rs 25,000, for your parents, if they are below the age of 60.

Example: Rohit is 30 years old and pays a premium of Rs 20,000 on his Health Insurance policy and Rs 10,000 for the Health Insurance premium of his spouse. Moreover, he also pays a premium for a Medical Insurance policy of Rs 35,000 for his father who is 55 years of age.

In such case, the maximum deduction Rohit can claim under section 80D is

Actual expense (in INR)

Maximum allowed limit (in INR)

Premium paid for self and spouse 

20,000+10,000 = 30,000


Premium paid for his father





Although Rohit paid Rs 65,000 towards insurance premium, he can only avail a deduction of Rs 50,000, which is the permissible tax benefit.

Taxable income calculation

Rohit's gross income: Rs 5,25,000

(-) Tax deduction under Section 80D: Rs 50,000

Taxable income: Rs 4,75,000

Provision 2

If your parents are above 60 years of age, the exemption limit that you can avail for them is Rs 50,000 along with your deduction limit of Rs 25,000.

Example: Vivek is 50 years old and pays a premium of Rs 22,000 for a Health Insurance policy. He also pays a premium for the medical insurance policy of Rs 45,000 for his mother who is 70 years old.

Let's look into the amount of tax benefit he can avail under section 80D

Actual expense (in INR)

Maximum allowed limit (in INR)

Premium paid for self 



Premium paid for his mother





Vivek can claim the whole amount of insurance premium paid of Rs 67,000 as a deduction under 80D, as it is within the allowed limit of INR 75,000

Taxable income calculation

Vivek's gross income: Rs 7,00,000

(-) Tax deduction under Section 80D allowed: Rs 67,000

Taxable income: Rs 6,33,000

Provision 3

If you and your parents, both are above the age of 60 years, you can avail of a tax benefit for a maximum limit of Rs 1,00,000 (Rs 50,000 each, for you and your parents)

Example: Ramesh is 61 years old and pays an insurance premium of Rs 45,000 for himself and his son. He also pays a Health Insurance premium of Rs 65,000 for his father who is 78 years of age.

Actual expense (in Rs)

Maximum allowed limit (in Rs)

Premium paid for self and son



Premium paid for his mother





Although Ramesh has paid Rs 1,10,000 towards the insurance premium for himself, his son and his mother, he can claim a deduction of only Rs 95,000 (45,000 + 50,000) under Section 80D.

Taxable income calculation

Ramesh's gross income: Rs 8,50,000

(-) tax deduction under section 80D allowed: Rs 95,000

Taxable income: Rs 7,55,000

Investing in a Health Insurance policy provides you the dual benefits of medical security and tax benefits. Here HDFC Bank can come to your aid. You can choose from the plethora of the products and invest in the one best suited for you.

Under Section 80C of the Income Tax Act, 1961 you can save tax by investing in Tax saving FD. Calculate using FD calculator.

The tax saving fixed deposit is an investment financial instrument which lets you claim a deduction of 1.5 lacs annually.

Looking to apply for a Health Insurance plan? Click here to get started!

* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.