Yes, you can.
Health insurance premiums for senior citizens are always on the higher side. Insurance companies may also be disinclined towards providing medical insurance for those who are old or suffer from pre-existing ailments.
The premium paid towards health insurance policies for your parents qualifies for deduction under Section 80D of the Income Tax Act. The Finance Act, 2018 offers higher deductions for medical premiums paid for senior citizens. This will be over and above anything you can save under Section 80C of the Income Tax Act.
This tax benefit is available to individuals on health insurance premium paid for self, spouse, children and also parents. Importantly, it does not matter whether the children or parents are dependent on you or not.
Medical insurance premium paid for a family member enjoys Rs 25,000 deduction. Tax benefit of up to Rs 50,000 for medical insurance paid for parents is allowed.
Below is a brief about the deductions allowed under 80D:
Self and Family (All members below 60 years)
For Self and Family + Parents (All members below 60 years)
₹25,000 + ₹25,000) = ₹50,000
For Self and Family (all members below 60 years) + Senior Citizen Parents
₹25,000 + ₹50,000 = ₹75,000
For Self and Family (with eldest member above 60 years) + Senior Citizen Parents
₹50,000 + ₹50,000) = ₹1,00,000
Below are some points to be noted while claiming tax deduction:
- Contribution towards health insurance plan has to be made to a scheme as specified by the Central Government approved by IRDA.
- Payment should be made by any mode other than cash.
- Senior citizen means an individual resident in India who is of the age of 60 years or more during the relevant financial year.
- Benefits under Section 80D are in addition to Section 80C tax breaks of up to Rs. 1.5 lakh.
- Amount available for senior citizens’ deduction can also be spent for medical expenses.
- Premium paid towards a brother, sister, grandparents, aunts, uncles or any other relative cannot be claimed as a deduction for taking tax benefit.
- Premium paid on behalf of working children cannot be taken for tax benefit.
- In the case of part payment by you and a parent, both of you can claim a deduction to the extent paid by each.
- The deduction has to be taken without showing the Service Tax and Cess portion from the premium amount.
What documents do I require to claim the deduction?
The only documents required to claim the deduction is your premium payment receipt and your insurance policy copy which shows the name of the family members and their relation and age. In case of premium paid for the parents policy, the proposer should ask for 80D certificate from the insurance company by providing the payment details in his name.
Conclusion: It’s often said that one should not invest merely for saving taxes. In case of health insurance, which anyhow is not an investment, the premium paid not only buys you health cover but also aids in saving taxes. In view of the rising hospital costs for senior citizens, buying a health insurance certainly helps.