Senior Citizen Insurance Planning — Health + Pension Integration

Two needs that meet in retirement

Planning for people aged 60 and above joins two needs: health cover for medical costs and a dependable income for living expenses. They are linked, because a large hospital bill paid out of savings shrinks the money that was meant to produce income.

Health cover: what the rules now provide

Under IRDAI's Master Circular on Health Insurance Business of 29 May 2024, health insurance products must be offered for all ages, so no maximum entry age can be imposed. An insurer cannot refuse to renew an individual health policy because claims were made in earlier years, and cannot ask for fresh underwriting unless the sum insured is being increased.

The waiting period for a pre-existing disease is capped at 36 months. Since 30 January 2025 an insurer may not raise the premium on a senior citizen's individual indemnity health policy by more than 10% a year without consulting IRDAI.

Co-payment, sub-limits and similar features are set by each policy, not by the regulator. GST has been nil on individual health insurance premiums, including senior-citizen policies, since 22 September 2025.

Public cover from age 70

Ayushman Vay Vandana, in force from 29 October 2024, extends PM-JAY cover of ₹5 lakh per family a year to senior citizens aged 70 or more, with no income test. Where the family is already covered by PM-JAY, the seniors receive a separate top-up of ₹5 lakh a year. PM-JAY pays for hospitalisation at empanelled hospitals on a cashless basis and beneficiaries pay no premium.

Sources of income

Common sources are annuities, the NPS, the Employees' Provident Fund and small-savings schemes such as the Senior Citizens Savings Scheme (SCSS). A life annuity pays for as long as the annuitant lives; annuity income is fully taxable.

The SCSS accepts deposits of up to ₹30 lakh per individual, raised from ₹15 lakh with effect from 1 April 2023. Interest is paid quarterly and is taxable. The rate is reviewed by the government every quarter and is 8.2% a year for October–December 2026; for any later quarter, the current notification has to be checked.

Tax deductions for health costs

Section 126 of the Income-tax Act, 2025 (old section 80D) allows up to ₹50,000 a year for health insurance premiums where the person insured is a senior citizen, against ₹25,000 otherwise. A preventive health check-up of up to ₹5,000 counts within the limit. A further ₹50,000 is available for senior-citizen parents, so the combined maximum is ₹1,00,000. The premium must be paid otherwise than in cash; only the check-up may be paid in cash.

Section 128 (old section 80DDB) allows up to ₹1,00,000 for the treatment of specified diseases where the person treated is a senior citizen, against ₹40,000 otherwise, reduced by any insurance reimbursement. Both deductions are available only under the old tax regime.

Rules at a glance

Key points

• Health insurance must be offered for all ages, and renewal cannot be refused because of past claims.
• A senior citizen's individual indemnity health premium cannot rise by more than 10% a year without the insurer consulting IRDAI.
• Ayushman Vay Vandana gives PM-JAY cover of ₹5 lakh a year to people aged 70 or more, with no income test.
• The SCSS deposit limit is ₹30 lakh; interest is paid quarterly and is taxable.
• Section 126 allows up to ₹50,000 for a senior citizen's health premium, and section 128 up to ₹1,00,000 for specified diseases, under the old regime only.

Common misunderstandings

• The 10% limit is not a blanket cap on every policy: it covers a senior citizen's individual indemnity health policy, and a higher increase needs consultation with IRDAI.
• Ayushman Vay Vandana is not limited to low-income families: it covers people aged 70 or more with no income test.
• The deductions under sections 126 and 128 do not exist under the new tax regime: both are available only under the old one.

Questions people ask