You can save tax on Medical Insurance.

Source

Keeping rising medical costs in mind, we invest in medical insurance, at times these are provided by the employer but we buy medical insurance in order to secure ourselves. Now the Income Tax act provides us with the exemption for both medical allowances provided by the employer as well as for Medical claim or insurance policies bought by us or paid for by our employers. Thus, we are not only securing our savings from the mammoth health expenses we are getting a tax exemption for our wise decision too. We can get this exemption under Section 80D, both for the premium paid as well as for preventive health check up where we are paying in cash for our check up. Budget 2015-2016 has raised the Premium deduction to 25,000 and 30000 for senior citizen under Section  80D

You can claim deduction if the medical policy is in the name of Self or/and Spouse or /and, parents, dependent or not dependent and /or dependent children

An HUF can claim benefit for its members under this section too, however, the upper limit shall stay as mentioned herewith.

Very senior citizens, ie above the age of 80, who are unable to or don’t have any health insurance coverage can also get an exemption of 30000 spent for medical expenses, check up and treatment etc

So let’s check out how this works:

I am less than 60 years of age, and am paying the medical insurance premium for myself, my spouse, kid and my parents who are less than 60 years of age.

Maximum deduction would be 50,000 ( 25000 for myself, spouse and kids and another 25000 for parents)

I am less than 60 years of age and am paying the medical insurance premium for myself, my spouse, kid and my parents( either or) who are above 60 years of age.

Maximum deduction would be 55,000 ( 25000 for myself, spouse and kids and another 30000 for parents)

I am above 60 years of age and am paying the medical insurance premium for myself, my spouse, kid and my parents( either or) who are above 60 years of age.

Maximum deduction would be 60,000 ( 30000 for myself, spouse and kids and another 30000 for parents)

You need to keep the following points in mind regarding this deduction:

• Tax deduction is available on health insurance as well as Medi claim policies
• These policies or insurances can be paid for by your employer or can be paid by you on your own.
• Never ever pay the premium in cash, it should be a bank transaction, draft, cheque, credit card, net banking, anything other than cash
• Only premium amount fall under deduction, service tax doesn’t.
• Medical insurance on children qualifies for deduction till they are dependent. You can show your son as dependent ( unemployed) until the age of 25 years. Your daughter can be shown as dependent( unemployed)  till she gets married off.
• You can claim benefits both under section 80C and 80D
• In-laws are not covered under Section 80D, so spouse has to cover his or her parents insurance payment claims
• Part payment of premium is allowed. Say you and your father are sharing a medi claim policy, both of you can claim deduction under the same section

Preventive health checks up also qualify under Section 80D, you can claim up to Rs 5000 as the deduction, however you cannot exceed the 25000 and 30000 limit. 

Thus, if you already have a health policy with a premium of 25000, and you are below 60 years of age you will not get the deduction for the health check-up.

Section 80D as explained above is for Mediclaim or medical insurance and Section 10 is for Medical Allowance which forms part of your salary, you can get an exemption up to Rs 15000.

Thus, you can claim both benefits, you could submit bills and claim 15000 exemption under section 10 and submit Medical premium bill and claim deduction under section 80D

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