When you take a medical insurance, you are entitled to receive income tax exemption under section 80D. But you may not be aware that even preventive health care check up is also eligible for income tax exemption under the same provision of the income tax law.
The exemption allowed is up to a maximum of ₹5,000. This is part of the overall limit of ₹25,000 for persons under the age of 60.
In other words, if the premium paid is less than ₹25,000 then you can use preventive health check-up expenditure to claim the entire exemption limit. For instance, when a policy holder ‘A’ spends ₹18,000 on medical insurance and ₹5,000 on medical check up then he can claim both ₹18,000 + 5,000 = ₹23,000 since the sum falls under the maximum limit of ₹25,000.
At the same time, when ‘A’ spends ₹23,000 as premium and another ₹10,000 on medical check up then ‘A’ can claim only ₹23,000 plus 2,000 because the maximum cap of ₹25,000 cannot be breached.
Let’s take another scenario. ‘A’ takes a policy for which he pays ₹15,000 premium and spends ₹7,000 on preventive health check up then even though the total expenditure is less than ₹25,000, still he can’t seek exemption for ₹7,000 since the maximum exemption for health check-up is ₹5,000. So, in this scenario he can seek exemption for ₹15,000 plus 5,000 i.e., ₹20,000.
But remember that if your preventive health check-ups are paid for by medical insurance companies, then policy holder can’t make this claim since he has not incurred the expenditure. There are some insurers which offer the facility of medical health check-up to insured – those persons, however, can’t claim an extra deduction for the health check-up.
“This clause of preventive health check is slightly tricky because it comes handy only when the insurance premium amount is less than the prescribed limit which is ₹25,000 for those under 60. In case someone has already paid more than this sum on premium, then you can’t take exemption for ₹5,000 separately," says Deepak Aggarwal, Delhi-based chartered account and financial advisor.
So, insured persons can claim separate exemptions for preventive health check-up so long as it falls under the prescribed total cap.