Section 80D and health insurance

What is section 80D?

Section 80D of the Income-tax Act, 1961 gives individuals and Hindu undivided families (HUFs) a deduction from taxable income for health insurance premiums and some related health spending. The limit depends on whose health is covered and whether that person is a senior citizen (aged 60 or more). It is separate from, and in addition to, the ₹1.5 lakh limit under section 80C.

As of October 2026, the Income-tax Act, 2025 applies from 1 April 2026, and the health insurance deduction continues as section 126 of the new Act with the same structure. Section 80D still applies to income of financial year 2025-26 and earlier.

How the section 80D deduction works

So the most an individual can claim is ₹1 lakh: ₹50,000 for a senior citizen taxpayer and family, and ₹50,000 for senior citizen parents.

Conditions to keep in mind:

• Mode of payment. Premiums must be paid by any mode other than cash. Only the preventive health check-up can be paid in cash.
• What counts. Premiums on health insurance policies, including family floater, top-up and critical illness policies, and contributions to the Central Government Health Scheme or other notified schemes.
• Multi-year premiums. Where a premium covering more than one year is paid in a lump sum, the deduction is spread equally over the years of cover.
• Employer cover. Premiums an employer pays for a group health policy are not deductible by the employee. A top-up the employee pays for personally can be.
• Tax regime. Like 80C, the deduction is available only under the old regime. The default new regime, under section 115BAC of the 1961 Act and section 202 of the 2025 Act, does not allow it.

Example

A 40-year-old taxpayer under the old regime pays ₹22,000 for a family floater covering herself, her husband and child, and ₹38,000 for a policy covering her parents, both over 60. She also spends ₹4,000 on health check-ups for the family. She can claim ₹25,000 for the family (₹22,000 premium plus ₹3,000 of the check-up, since the family limit caps at ₹25,000) and ₹38,000 for her parents, a total of ₹63,000.

What section 80D means for distribution

• Tax is a secondary reason to buy health cover. With most salaried taxpayers on the new regime, the 80D deduction no longer reaches the majority of buyers. Health insurance is sold on medical inflation and hospital costs, and advisers should not lead with tax unless the customer files under the old regime.
• Parents' cover is a strong conversation. The separate parents' limit, and the higher ₹50,000 limit for senior citizen parents, make a case for a separate policy for parents for old regime taxpayers. Under either regime, the cost of hospitalising older parents is the real argument. See senior citizen health insurance.
• Premium certificates must be right. Customers need a certificate showing premium paid, the people covered and the period. For multi-year policies the certificate should show the yearly split. Errors lead to rejected claims for deduction and complaints.
• GST change affects the deductible amount. Since 22 September 2025, individual health policies carry no GST. The deduction is based on premium paid, so the deductible figure for the same cover is now lower than before. See GST on insurance.
• Cash premiums lose the deduction. A premium paid in cash is not deductible, even if the policy is valid. Agents who still collect cash in some markets should move customers to digital payment or cheque before the renewal date.
• Use the new section number from April 2026. Certificates and marketing material for tax year 2026-27 onwards should cite section 126 of the Income-tax Act, 2025.