Introduction

Improved medical care, enhanced diet, and healthier lifestyles have all contributed to a boosted country's life expectancy. India, in 1950, was looking at a life expectancy of 35.21; now the predictions for 2100 have increased the expectancy to 81.96.

While this is truly a piece of good news, such enhanced life expectancy has also brought forth a few issues that need to be handled with the utmost care. One of them is that with the boosted age expectancy, the cost of healthcare has shot up north too. To cater to this hurdle, customised health insurance plans have been designed that target multiple imminent and existing ailments among golden-agers.

Such tailored plans definitely offer the perk of being a comprehensive policy, along with tax deductions under Section 80D which is a financial consolation given the spiked premiums on the health insurance policies for senior citizens. So, what exactly is this Section 80D? Let’s find out!

Section 80D

A. What is Section 80D?

Section 80D of the Income Tax Act of 1961, which is applicable for health insurance premium payments, is an incredible option for individuals trying to save income tax. As of 2023, there are two tax regimes - old and new. Those who have opted for

  • The New tax regime, will not be able to opt for tax deductions under Section 80D.
  • The Old tax regime will be able to enjoy the tax deduction perks under Section 80D.

B. Who can avail of tax benefits under Section 80D?

The deductions under Section 80D are offered and can be enjoyed by

  • Any and all Individuals who Pay the health insurance premiums for their self, spouse, children, and parents.
  • Anyone who has availed of preventive health check-ups.
  • Individuals making contributions towards any Central Government health scheme or any scheme that has been notified by the government.
  • Any senior citizens without health insurance policies for their medical expenses.

Such tax deductions that are applicable on health insurance premiums paid are beneficial for a majority considering the high premiums that are demanded by insurers for the best health insurance plans. However, such deductions are specifically considered perks for those whose income is either fluctuating or non-existent, i.e., senior citizens.

Let’s start off by discussing how health for senior citizens is not an option, but a necessity, particularly considering the recent economic and medical circumstances.

What is the significance of health insurance for senior citizens?

The global economy faced its worst during the pandemic. None of the industries were at all prepared for a disaster of this measure. However, the worst nightmare came in for the healthcare sector. And medical inflation started growing in leaps and bounds. While this is a huge concern for all because of how one can meet their medical expenses, for those in their retirement years, such expenditures are an unbearable burden to bear.

For such senior citizens, plans from the best health insurance providers are a life-saver. The frequent hospitalisations and high chances of health complications guarantee high hospital bills which are difficult to meet over pensions and secondary sources of income that barely help them run their daily expenses.

With the best health insurance plans for parents senior citizens that are comprehensive and offer coverage for a majority of health conditions, policyholders don’t have to worry about spending significantly from their savings during times of medical emergencies (add on to this the mental peace that one gets since they don’t have to worry about the bill payment, especially if the mode of payment is cashless).

Additionally, keeping in mind the financial challenges that retired individuals face, the IRDAI and health insurers have offered additional benefits in the form of boosted capped amounts of tax deductions under Section 80D.

What is the 80D Deduction for Senior Citizens?

In general, the tax deductions under Section 80D are capped at INR 25,000. However, for senior citizens, the threshold amount is limited to INR 50,000. The idea was to financially empower the policyholders in their golden years by offering them a higher tax deduction since the premiums on the best health insurance policies for senior citizens are high too.

As health insurance providers financially shield themselves from the high risks of payout over frequent hospitalisation, the regulators too shield the policyholders financially by offering them a higher tax deduction.

On the other hand,

-at times make it impossible for senior citizens to avail of health insurance policies. This leaves the individuals vulnerable to medical complications and subsequent expenses. In such cases, even for preventive health checkups, the senior citizens are looking at major eating away at their life savings. Even in this case, where they have no active health insurance policy coverage, individuals can enjoy the benefits of tax deductions under Section 80D.

Take a look at the use cases -

USE CASE:


Particulars 

TAX DEDUCTIONS UNDER SECTION 80D (MAX)

Self (under 60) + Parents (under 60)

INR 25,000 + INR 25,000 = INR 50,000

Self (under 60) + Parents (above 60)

INR 25,000 + INR 50,000 = INR 75,000

Self (above 60) + Parents (above 60)

INR 50,000 + INR 50,000 = INR 1 Lakh


CTA

Things to know about the 80D Deduction for Senior Citizens

  1. PREVENTIVE HEALTHCARE CHECK-UPS: Preventive health check-ups (diagnostic tests and procedures) are targeted to enhance proactive care towards one’s health over frequent health checkups.

The preventive health check-up deductions are a step towards ensuring the best use of this perk and were thus introduced in 2013-14 by the government. These deductions are separately capped at INR 5,000.

2. MODE OF PAYMENT: To avail of the tax deductions under Section 80D, a specific mode of payment has to be kept in mind -

For preventive healthcare check-ups ONLY

All modes of payment 

Any and all treatments (except preventive healthcare check-ups)

All modes of payment (except cash)

Conclusion

When it comes to senior citizens with a major restriction on their source of income and a life’s savings that is intended to support them for the rest of their golden years, health insurance premiums become a matter of grave choice. A policy that they need owing to their health complications and the consequent medical expenditures, and yet a policy that is a substantial financial burden. However, there is no way that healthcare service quality can be compromised over spiked premiums. To facilitate this, the higher tax deductions under Section 80D are an incredible way out.