Learn · Health insurance & tax
Section 80D Tax Benefit on Health Insurance
Section 80D of the Income-Tax Act, 1961 lets an individual or Hindu Undivided Family deduct health-insurance premiums they pay from taxable income — up to ₹25,000 for self, spouse and children, plus a further ₹25,000 (₹50,000 if parents are senior citizens) for parents. Employers deduct group-cover premiums separately as a business expense.
Key takeaway
Section 80D is claimed by whoever pays the premium. Employer-paid group cover is a business expense; an employee’s own top-up or parents’ premium is deductible up to ₹1,00,000.
How Section 80D works in a group or employer plan
Section 80D is claimed by the person who pays the premium. That single rule decides who gets the benefit in a workplace setting. When you provide group health insurance and the company pays the full premium, the deduction does not pass to the employee — they have not spent anything, so there is nothing for them to claim under 80D. Instead, the company books the premium as a business expense.
The employee’s 80D claim reappears the moment they pay something themselves. Common examples in a group plan:
- A voluntary top-up or higher sum-insured slab the employee funds from salary.
- Premium for adding parents or dependents that the employer does not cover.
- A separate retail policy the employee buys alongside the group cover.
Two further conditions matter. First, the premium must be paid by a non-cash mode — UPI, card, net banking or cheque — except preventive health check-ups, which may be paid in cash within a ₹5,000 sub-limit. Second, from FY 2023-24 the new tax regime is the default, and 80D deductions are available only under the old regime. Employees on the new regime cannot claim 80D at all, which makes an employer-funded plan the more valuable benefit for them.
The limits, at a glance (old regime, FY 2025-26). The “Total” column is the combined deduction across self/family and parents.
| Who is covered | Self & family | Total deduction |
|---|---|---|
| You + family (all below 60) | ₹25,000 | ₹25,000 |
| You + family, parents below 60 | ₹25,000 | ₹50,000 |
| You + family, parents 60 or above | ₹25,000 | ₹75,000 |
| You 60+ and parents 60+ | ₹50,000 | ₹1,00,000 |
Preventive health check-ups are covered within — not on top of — these limits, up to ₹5,000.
A worked example
Ananya, 34, is covered by her employer’s group plan at no cost to her. During the year she also pays, from her own account, for extra cover and for her parents. Here is what she personally spends:
| Top-up cover for self, spouse and two children | ₹22,000 |
| Preventive health check-up for the family | ₹5,000 (capped) |
| Separate policy for parents aged 63 and 66 | ₹48,000 |
Her self-and-family spend is ₹27,000, but that bucket is capped at ₹25,000. Her parents are senior citizens, so their ₹48,000 is fully allowed against the ₹50,000 parent limit. Ananya’s total 80D deduction is ₹25,000 + ₹48,000 = ₹73,000. In the 30% tax slab, that lowers her tax by roughly ₹21,900 (plus cess) — none of which she could claim on the employer-paid group premium itself.
Her employer, meanwhile, deducts the full group-plan premium it paid for Ananya and her colleagues as a business expense. The same rupee is never claimed twice, and both sides benefit.
Why it matters for employers
Getting 80D right is part of communicating the true value of the benefit you fund. Three points are worth making clear to your team and finance function:
You already get a deduction — as the business
The premium you pay for a bona fide group policy is an allowable business expense under Section 37(1), reducing taxable profit. This is a company-level benefit and does not depend on any employee filing.
Set expectations on the perquisite
Employer-paid group premium is generally not a taxable perquisite for the employee, but it also means the employee cannot claim 80D on it. Saying so upfront avoids confusion at tax-filing time.
Make voluntary top-ups tax-smart
If you let employees add parents, dependents or higher cover by paying themselves, flag that those payments are 80D-eligible under the old regime — turning a payroll deduction into a genuine tax saving for them.
How Onsurity handles it
Onsurity is built so both the company-level deduction and the employee-level 80D benefit are easy to act on:
- Clean premium records for your books. The TeamSure dashboard gives finance a single, itemised view of every premium paid, so claiming the group premium as a business expense is straightforward at year-end.
- Employee-paid top-ups, documented. When employees add parents, dependents or extra cover and pay themselves, they get a clear premium receipt in the Onsurity Super App to support their old-regime 80D claim.
- Cover that is actually usable. Cashless treatment at 10,000+ network hospitals, a Good Doctors claims concierge that guides members from admission to settlement, and cashless hospitalisation support in the app.
- Day-1 cover options. Choose plans with no waiting period so protection — and the value your team sees in it — starts immediately.
This page explains Section 80D in general terms and is not tax advice. Deduction limits and regime rules can change; confirm your specific position with a qualified tax adviser.
Frequently asked questions
Can an employee claim Section 80D on employer-paid group health insurance?
No. If the employer pays the entire premium, the employee has not paid it and cannot claim it under Section 80D. The employer treats that premium as a business expense. The employee can, however, claim 80D on any amount they personally pay — for example, a voluntary top-up or the premium for adding parents or dependents.
What is the maximum deduction available under Section 80D?
The highest possible deduction is ₹1,00,000 in a financial year — ₹50,000 when you and your spouse are senior citizens, plus ₹50,000 for senior-citizen parents. Within these limits, preventive health check-ups are covered up to ₹5,000.
Is Section 80D available under the new tax regime?
No. Section 80D deductions apply only under the old tax regime. Employees who opt for the new (default) regime forego 80D, so the group-cover perquisite and any employer contribution become the more relevant benefit for them.
Do premiums have to be paid by a specific mode to qualify?
Yes. Premiums must be paid by any mode other than cash — such as UPI, net banking, card or cheque — to qualify for the 80D deduction. Only preventive health check-up expenses may be paid in cash within the ₹5,000 sub-limit.
Can a company claim tax benefit on the group health insurance it buys?
Yes. Premiums a company pays for a genuine group health policy covering its employees are generally allowed as a business expenditure under Section 37(1) of the Income-Tax Act, reducing the company’s taxable profit. This is separate from an employee’s personal 80D claim.
Related terms
Keep exploring the group-cover glossary.
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