When you take a medical insurance cover, the premium that you pay for it is eligible for tax deduction. This means the money that you pay for the premium will not be factored in for tax calculation. The amount varies depending on your age. Also, if you are paying premium for your parents, spouse or children’s medical insurance, you will be eligible for a tax break for that amount. In this case as well the amount eligible for deduction will vary depending on the age of the dependent. You can claim this deduction under Section 80D of the Income Tax Act. It is applicable on your total income every year.
If you are an individual below the age of 60 years, you are eligible for a deduction of amount up to Rs. 25,000. If your parents are below the age of 60 years and you are paying the premium on medical insurance for them, then you get an exemption of another Rs. 25,000.
If your parents are senior citizens, 60 years and above, the exemption limit goes up to Rs. 50,000. If you and your dependents are senior citizens and you pay premium for medical cover, the total exemption limit will go up to Rs. lakh. Usually you don’t end up using the upper limit of the cover.
You also get tax break if you do a preventive health check-up. The upper limit for preventive health check-up that qualifies for deduction is Rs. 5,000. However, the amount has to be within the upper limit of the amount eligible for medical insurance. For instance, if you are 30 years old, you will be eligible for Rs. 25,000 exemption for premium on medical cover. If your medical cover premium is Rs. 24,000 and the preventive health check-up is Rs. 5,000, you will not be eligible for tax deduction on the entire amount but only Rs. 1,000. This benefit is also eligible every financial year.