There is a famous saying "From the bitterness of disease man learns the sweetness of health". Investing in your health is a long term investment that bears fruit later in life.
The Government realizes this and to encourage you to take up a health plan gives you tax benefits.

What is Section 80 D of the income tax act?

You have the Section 80 D of the income tax act where you get a deduction of INR 25,000 a year on the health insurance premium you pay for a health plan for yourself and your family if you are under 60 years of age.
In case of premium for a health plan of a senior citizen (above 60 years of age) the deduction allowed shall be up to INR 30000 a year.
Income tax slabs and rates for the Union Budget 2015-16 continue to remain the same as last year.

Let us take a look at the income tax slabs for Individual Tax Payers up to the age of 60 years (Male/Female) in the Union Budget 2015-16
 

Mr Diwakar 35 years of age , married and working in an IT firm earns INR 8 Lakhs a year.

He invests INR 1 Lakh a year in an ELSS scheme and INR 1 Lakh a year in a PPF. He avails a deduction of only INR 1.5 Lakhs under Section 80 C of the income tax act even after investing INR 2 Lakhs in tax saving instruments.

Mr Diwakar has availed a family floater health plan for himself and his family and avails a deduction of INR 25000 a year on the premium he pays under Section 80 D of the income tax act.

Mr Diwakar also takes a health plan for his Dad and avails a deduction of INR 30,000 a year on the premium he pays under Section 80 D of the income tax act.
 

Mr Diwakar’s income tax liability is calculated as per the income tax slabs of the Union Budget 2015-16

How does the increase in the exemption limit under Section 80 D help you?

Section 80 D before the Union Budget 2015-16 :

You have the Section 80 D of the income tax act where you used to get a deduction of INR 15000 a year on the health insurance premium you pay for a health plan for yourself and your family if you are under 60 years of age.
In case of premium for a health plan of a senior citizen (above 60 years of age) the amount of deduction was INR 20,000 a year.
 

Mr Diwakar’s income tax liability is calculated as per the income tax slabs of the Union Budget 2014-15 :

Diwakar saves INR 49,440 – INR 45,320 = INR 4,120 on paying the health insurance premiums for his family and his dad who is a senior citizen.

Investing in health insurance means you save on your medical bills as well as your taxes.