To get a tax deduction under Section 80D, buying a health insurance policy in your name is not sufficient, as is usually assumed. Why? This is because Section 80D states that the health insurance premium can be paid by any mode other than cash. This goes to suggest that even credit card payments are accepted as eligible means of payment, but cash isn't. Moreover, apart from buying a policy in your name, you can also take it on the health of your spouse, parents and dependent children. You benefit the most, therefore, if you pay by any mode other than cash.
For instance. If you buy a health insurance policy by cash, you will not get any tax benefits under section 80D. To get the deduction, pay either through cheque or credit card. The deduction, however, cannot exceed Rs 15,000 for you, your spouse and dependent children. Similarly, there is a limit of Rs 15,000 for parents, but if the parent is 65 years old or above, an additional deduction of Rs 5,000 is given.
