Budget 2014 – Changes to Tax Relief on Health Insurance Premiums

Budget 2014 announced changes to the amount of tax relief at source which applies to health insurance policies. With effect from 16th October 2013, all new health insurance policies and renewals will have a maximum of 20% tax relief per adult applied to gross premiums up to €1,000. This means the maximum tax relief will be €200. For children*, the gross premium is capped at €500. This means the maximum tax relief will be €100.

This replaces the former tax relief at source of 20% of the total gross premium, where there was no capping on the maximum gross amount.

*Child tax relief limit applies to those under 18 years old and dependants on a policy who are between 18 and 23 years old in full-time education.

What this means for your premium?

This means that most health insurance customers will pay more. For an adult paying an annual gross premium of €1,000, there will be no change to the net amount they pay. They will still get 20% tax relief at source and the net amount they pay will be €800.

However, where the gross premium exceeds €1,000, there will be no further tax relief. For example, if a customer pays a gross premium of €1,500 for an adult, they will receive €200 tax relief and pay a net premium of €1,300. Under the previous tax relief, they would have got relief of 20% on the total gross premium and paid €1,200. So, their net premium has increased by over 8%.

When will your Insurer apply this change?

All insurers are obliged to introduce the change effective from 16th October 2013. Customers who have already renewed will not be affected until their next renewal date. For policies starting or renewing on or after 16th October, the new tax relief rates will apply. However, it may take a short time to update our billing systems to cater for this change. In the meantime, some correspondence may quote premiums based on pre-budget tax rates and we will communicate any adjustments to amounts shortly.

 

 

Leave a Reply