Section 80D deductions: A smart tax-planning guide to making most of health insurance premiums

Section 80D aims to encourage people to safeguard themselves and their families against rising medical expenses by making family health insurance policies more appealing. This facility is applicable to self, spouse, dependent children, and parents' insurance as given below:
- Premium paid for self and family – all below the age of 60 years: Rs 25,000
- Premium paid for parents above the age of 60 years: Rs 50,000
- Premium paid for self, family, and parents all above age 60: Rs 100,000

The family can claim Rs 5,000 as a preventive health check-up per person but it will be treated within the overall limit. For example, if one pays a premium of Rs 20,000 and goes for a preventive health check-up worth Rs 5,000, the total amount of Rs 25,000 will qualify for deduction under Section 80D.

Also read: ITR filing 2025-26: No health insurance? Here’s how senior citizens can still claim 80D tax benefits

In the case of senior citizen treatment costs, these can be added under the overall limit. For example, one pays Rs 25,000 for the premium and spends Rs 25,000 for the treatment of parents above age 60 then, Rs 50,000 can be claimed under Section 80D.

Old and new tax regime rules

The benefits of Section 80D, however, depend on which the tax regime that a taxpayer opts for. Individuals with the old tax regime are eligible to claim deductions under Section 80D.

This is beneficial for those with considerable investments, insurance, or other eligible expenses, as it allows a maximum rebate of Rs 25,000 for self, family, and Rs 25,000 for parents or Rs 50,000 if parents are senior citizens. However, the new regime does not allow exemptions and deductions, including under Section 80D.

Taxpayers under the new regime will be unable to claim such allowances. Therefore, individuals must calculate their income, deductions, and financial liabilities to determine which regime is more effective. In case you have high medical insurance premiums, the old regime may still offer bigger saving.

Also read: ITR Filing 2025: Checklist of essential documents before filing income tax return

Mistakes to avoid

Taxpayers frequently make some errors while claiming Section 80D deductions. One is paying premiums in cash, which is not deductible except for preventive health check-ups. Typically, individuals tend to wrongly claim deductions for siblings or independent adult children, which Section 80D does not allow.

Another common mistake is not having the appropriate proof of payment or policy documents, which can be used to validate claims during tax valuation. Some people also mistakenly believe that Section 80D deductions overlap with Section 80C, causing confusion and loss of tax-saving opportunities.

Documentation and compliance tips

Proper documentation and compliance can smoothen the process of claiming deductions. Taxpayers must retain receipts and documents of payments such as bank statements or electronic payment records to help them prove their claims.

It is also essential to preserve copies of the health insurance policies. For preventive health check-ups, it is important to save the bills and proof of payment. While submitting returns, ensure that deductions are properly reported under Section 80D.

Section 80D offers more than tax savings. For the new generation, it is a fiscal safeguard against healthcare expenses. With right insurance cover, documentation and an understanding of the deductions under the two tax regimes, families will be able to maximise their benefits. Section 80D is a valuable tax provision that is both a healthcare cover and a financial planning mechanism, and should therefore be a component of every family's tax planning.