n individual policy holder, or a family floater policy holder, is entitled to some benefits on the premium paid. If you are paying premium for your parents’ health insurance plan, you are entitled for an additional amount of tax exemption on this insurance too.

Let us first take a glimpse of the total tax exemption amount.

 

Type of insurance cover   
       Tax Benefits (U/S 80D)      Total Tax Benefit
Policy for Self (below 60 yrs. age)
   Rs. 25,000 (maximum) Rs. 25,000
Policy for Self & Family (Spouse and Children!)(all members below 60 years of age)
Rs. 25,000 (maximum) Rs. 25,000
Policy for Self(above 60 years of age) Rs. 30,000 (maximum) Rs. 30,000

Policy for Self&Family (below 60 yrs. age) + Parents (below 60 yrs. Age)

   Rs. 25,000 + Rs. 25,000 (maximum)
Rs. 50,000
Policy forSelf&Family (below 60 yrs. age) +Parents (both or one of the parents are above 60 yrs. age)
   Rs. 25,000 + Rs. 30,000 (maximum)
Rs. 55,000
Policy forSelf&Family (eldest member above 60 yrs. age) +Parents (both or one of the parents are above 60 yrs. age) Rs. 30,000 + Rs. 30,000 (maximum) Rs. 60,000

! See Eligibility for benefits under section 80D for more info

The proposer of the policy can avail the benefit, subject to the maximum prescribed limits.

For example:
•    An individual can claim tax benefit of Rs. 25,000, if the health insurance policy covers him/herand his family members, that is, his/her spouse and dependent children. In case any of the insured is 60 years of age or older, the proposer can claim a tax deduction of Rs. 30,000.
•    An individual can claim an additional tax benefit of Rs. 25,000, on parent’s policy premium. If your parents are senior citizens, then the amount is Rs. 30,000.

Different Scenarios

Scenario 1: An individual is paying X amount for his own policy and Y amount for policy of his parents, then Rs. 25,000 + Rs. 25,000 is the total amount deducted from your annual income, as non-taxable income.

Scenario 2: If parents are senior citizens, then the total amount deductible is Rs. 25,000 + Rs. 30,000. This amount is adjusted, irrespective of your parents being dependent on you or not.

Scenario 3: The amount incurred for preventive health check-up is also covered under section 80D. Rs. 5,000 will be considered as non-taxable income for preventive healthcare of an individual and his family or his parents. However, this amount (of Rs. 5,000) is included in the Rs. 25,000/Rs. 30,000 limits as mentioned above. Also, if you spend a sum of Rs. 5000 on your parents’ preventive care, you will be entitled to a tax benefit of Rs. 5,000.

Tax benefits for individuals paying for parents’ healthcare at a glance

 

Scenario
Total Exemption Preventive Healthcare Exemption Total Tax Exemption

Where you are below 60 years and your parents are senior citizens (60 or above)
Rs. 25,000 + Rs. 30,000 Rs. 5,000*
Rs. 55,000

Where you are 60 years or above and your parents are senior citizens (60 or above)
Rs. 30,000 + Rs. 30,000 Rs. 5,000*
Rs. 60,000

* Subject to Total Exemption Limit
Extension of Section 80D

Section 80DD: If an individual is also paying insurance premium for a dependent handicap, then the tax exempted amount is extended by. Rs. 75,000 for non-severe disabilities. The limit is raised to Rs. 125,000in case of severe disability cases. It included medical expenditure for treatment and rehabilitation of a disabled dependent. Your siblings, who are handicap and dependent on you, are also included in this category.

Section 80DDB: Special diseases cap is also tax deductible amount. The upper cap on this amount is Rs. 40,000 (for those aged below 60 years),Rs. 60,000 (for those aged above 60 years but less than 80 years) and Rs. 80,000 for those aged 80 years or above.
Eligibility for benefits under Section 80D

•    Only individuals and Hindu Undivided Family.
•    Payment should be made only by cheque, DDs, Net-banking, Credit, or Debit cards. Premium payment by cash is not exempted under IT act.
•    Only premium payment for dependent children. Children above 18 years of age who are employed are not covered. If you have a son who is above 18 years and not employed, then you can claim tax benefit till he is 25 years old. In case of daughters, only till she is not married and unemployed.
•    Tax deductions is not allowed for premium payment for siblings except under disabled category.
•    Service tax paid on your health insurance policy is not valid for tax exemption.

For instance, Apollo Munich offers health insurance plans, which not only offer protection from unexpected medical expenses, but also allow you tax benefits in the years you pay the premium. The deduction amounts are sufficiently high, so that you can not only cover your current family but also your parents. Considering the premium for elderly will be high, the deduction also allows you a higher amount.