Income Tax Benefits on Health Insurance — Section 80D Guide 2025

Health insurance isn’t just a financial safety net—it’s also a smart way to reduce your income tax burden. Under Section 80D of the Income Tax Act, 1961, you can claim deductions for the premiums you pay toward medical insurance for yourself and your family. This benefit has become even more relevant in 2025 as healthcare costs rise and the government continues promoting preventive financial planning.

1️⃣ What is Section 80D and How Does It Work?

Section 80D allows individuals and Hindu Undivided Families (HUFs) to claim deductions for premiums paid on health insurance policies. You can claim these deductions whether your policy covers yourself, your spouse, children, or even your parents. The deduction limit depends on who you are paying the premium for and whether they are senior citizens.

2️⃣ Deduction Limits under Section 80D (Updated for FY 2024-25)

• Self, spouse, and dependent children: Up to ₹25,000
• Parents below 60 years: Additional ₹25,000
• Parents above 60 years: Additional ₹50,000
• Preventive health check-ups: Included within the limit (up to ₹5,000)

That means a taxpayer covering senior-citizen parents can claim up to ₹75,000 per year. If both the taxpayer and parents are senior citizens, the combined deduction can go up to ₹1 lakh!

3️⃣ Example of Tax Saving Using Health Insurance

Let’s say Rahul, aged 35, pays ₹22,000 for a family health insurance policy and ₹42,000 for his senior-citizen parents’ policy. He can claim ₹22,000 + ₹42,000 = ₹64,000 as deduction under Section 80D. If he falls under the 20% tax bracket, he saves about ₹12,800 in tax instantly—on top of the medical security he gets.

4️⃣ Preventive Health Check-up Benefit

One of the most overlooked features of Section 80D is the ₹5,000 preventive health check-up benefit. You can include the cost of diagnostic tests, annual physicals, or health screenings within your deduction limit. Even if your employer offers a wellness package, keep receipts—they’re valid proof for IT filing.

5️⃣ Who Can Claim Section 80D Tax Benefits?

• Resident individuals and HUFs
• Premium paid for self, spouse, dependent children, and parents
• Premium must be paid from taxpayer’s income and not reimbursed by employer

Note that group health policies offered by employers don’t qualify for Section 80D deductions unless you personally contribute toward the premium.

6️⃣ Best Time to Buy Health Insurance for Tax Saving

Many people rush to buy a policy in March to save tax, but experts advise buying in April or May. Doing so ensures you complete a full policy year before the next tax season and get maximum coverage. More importantly, you avoid the last-minute rush and choose plans with better benefits and NCB bonuses.

Speaking of bonuses, don’t forget to read our guide on No Claim Bonus in Health Insurance to learn how you can combine NCB and tax benefits to get double value from your policy.

7️⃣ Documents Required to Claim 80D Deductions

• Policy copy showing premium amount and insured names
• Payment proof (UPI, bank statement or card receipt)
• Receipts for preventive check-ups (if applicable)
• PAN and Aadhaar for IT return verification