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Health Insurance Tax Benefits for Salaried Employees

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Created on
July 25, 2023


What’s Inside

If you are a salaried employee, there may be two kinds of health insurance coverage available to you. The first is your personal, self-purchased health insurance, while the other is a group medical insurance plan that your employer may offer. This article will give you clarity on both these types of health insurance as well as the details of health insurance deductions in income tax. 

Personal Health Insurance vs Group Health Insurance

A personal health insurance plan is any policy that you directly purchase from the insurance service provider and pay the premiums out of pocket. Your employer does not act as an intermediary in this type of insurance policy, and the relationship is directly between you and your insurer. 

On the other hand, a group insurance plan is offered by employers to their employees. If your employer offers this benefit, the responsibility for paying the premiums for the policy may be:

  • Fully with the employer
  • Shared between you and the employer
  • Fully yours to bear

If you are paying a part or all of the premiums, you can avail of medical insurance tax benefits on the portion of the premiums you pay during the financial year. However, in case your employer pays the entire premium on your behalf, you will not be eligible for any health insurance rebate in income tax.

Tax Benefits on Health Insurance Premiums for Salaried Employees

Section 80D of the Income Tax Act, 1961 offers the following health insurance tax benefits on the premiums paid for your health insurance policy during any given financial year. This applies to premiums paid for both self-purchased and group medical insurance policies, provided the premiums are paid out of pocket. 

Maximum medical insurance premium deductible (paid for self, spouse and/or children)

Maximum medical insurance premium deductible (paid for parents)

Age of the insured person

Total deduction under section 80D

Rs. 25,000

Below the age of 60

Rs. 25,000

Rs. 25,000

Rs. 25,000

Below the age of 60

Rs. 50,000

Rs. 25,000

Rs. 50,000

Self, spouse or child below the age of 60 but parent aged 60 years or more

Rs. 75,000

Rs. 50,000

Rs. 50,000

Self, spouse or child as well as parent aged 60 years or more

Rs. 1,00,000

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Frequently Asked Questions 

1. Is medical insurance a part of the salary?

Some employers may offer a medical allowance as a part of the salary, while others may offer group health insurance benefits. However, medical insurance is typically not included in the salary. 

2. Is health insurance deducted from salary?

The premium paid for the employee’s personal health insurance is not deducted by the employer. However, any premium that the employer pays for the employee’s group insurance is considered as profits in lieu of salary. 

3. Is health insurance included in CTC?

Yes, if the company pays health insurance premiums for the employee, the premiums are considered a part of the Cost to Company (CTC). 

4. What is health insurance in payroll?

Health insurance in payroll typically refers to any group medical insurance policy that an employer offers their employees. 

5. What are the employee benefits of health insurance?

Employees enjoy various benefits from health insurance, including coverage for hospitalization costs, pre and post-hospitalization expenses, doctors’ consultation fees, diagnostic costs and more.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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