Medical insurance tax relief 2026: what counts for the RM4,000 premium line

What the RM4,000 covers

The relief comes from section 49(1B) of the Income Tax Act 1967. LHDN lists it as item 19, insurance premium for education or medical benefit, restricted to RM4,000. It covers premiums or takaful contributions you pay for yourself, your husband or wife, and your child. It was RM3,000 up to YA 2024, and Budget 2025 raised it to RM4,000.

LHDN's notes to Form BE set out what makes a medical policy qualify. It must pay for treatment caused by a disease, an accident or a disability. The cover must run for 12 months or more. And it can be a stand-alone policy, which is what most people call a medical card, or a rider attached to a life insurance or family takaful plan.

An education policy qualifies too, on stricter terms. The child must be the beneficiary, or the nominee where a parent is the insured. The maturity amount must be scheduled to be paid when the child is between 13 and 25. Where the child is the insured, the policy needs a payor benefit rider covering the parent who pays. For takaful, the parent is the participant and the proceeds are made hibah to the child. Medical and education premiums share the one RM4,000.

Your life policy: only the rider goes here

This is where most people lose money. Hospital cover is often a rider on an investment-linked or life policy, paid as one premium for the lot. LHDN's rule is that only the rider premium counts as medical insurance. The basic life premium belongs on a different line: life insurance and EPF, where life cover has its own RM3,000 inside a RM7,000 group.

So one policy can feed two reliefs. People who put the whole premium on the life line hit the RM3,000 limit there and leave the RM4,000 medical line empty. Ask your insurer or agent for the year's premium statement broken down by relief, and copy each figure to its own line.

Critical illness: the whole rider, or 60%

LHDN's notes give two answers for critical illness cover, which the notes call dreadful disease cover, and the difference is how it is sold. If the cover is a rider attached to a basic policy, the whole rider premium counts. If it is packaged together with term life or personal accident cover for one combined premium, 60% of the package premium counts. For any other arrangement, use the figure your insurer reports for this relief and keep its statement.

What never counts

The parents one surprises people most, because parents appear in other health reliefs. Not this one: LHDN's notes name only the individual, the husband or wife, and the child. What you spend on your parents' actual treatment and care is a different relief, the RM8,000 parents line, covered in our medical relief guide. LHDN also rules out the premium for a waiver benefit rider and travel insurance, medical cover included.

A worked example: the medical line nobody filled in

Arun files separately from his wife. After EPF, his life insurance line and his other reliefs, his chargeable income is RM86,000, so his top slice is taxed at 19%. Last year he claimed nothing on the RM4,000 line, because he thought his family's cover was all "life insurance". Here is what he paid in 2026:

Arun did not buy anything new. He split one statement into the right lines and left out the two premiums that do not belong. He paid RM8,650 in premiums in total, yet only RM3,940 goes on this line, and that is the honest figure. Claiming the full RM4,000 by adding his mother's card would be a wrong claim, not a saving.

Which children count, from YA 2026

From YA 2026, the year you file in 2027, the Income Tax Act spells out which children this relief covers. The Finance Act 2025 added a definition to section 49. A child counts if they are unmarried and one of these:

• under 18;
• 18 or over and in full-time study at a university, college, school or similar institution;
• serving under articles or indentures to qualify in a trade or profession; or
• disabled under written law, at any age.

In practice: if your son is 20, working and not studying, his medical card stops counting on the YA 2026 return. A married daughter's policy does not count either. The same definition covers the life insurance line. LHDN has not yet published the YA 2026 form notes, so check them when e-Filing opens on 1 March 2027.

Husband and wife: RM4,000 each, or one RM4,000

Under separate assessment, LHDN allows RM4,000 to you and another RM4,000 to your spouse, if your spouse has income. Each of you claims the premiums you paid. Under joint assessment the couple shares a single RM4,000. If your family's premiums run above RM4,000, and each of you holds and pays for some of the policies, both ceilings are in use.

Proof, and where it goes on the form

Keep the insurer's premium statement for each policy and year. On the YA 2025 Form BE this relief is item G19, and the rule is the same on Form B. Our e-BE walkthrough shows where the relief screen sits. Keep everything for seven years, the period LHDN can ask to see your records.

Medical insurance is one line among many. The tax relief checklist lists the rest for YA 2025 and YA 2026, and the free tax calculator shows what RM4,000 of relief is worth at your own income.