Tax Relief on Medical Insurance

By Michael O'Hare | 24 th March 2015

Medical Insurance is very much in the news at the moment with loadings being introduced after April 30th 2015 for people aged over 34 taking out inpatient private health insurance for the first time.

As many people will be looking at their options in advance of April 30th, it is important to understand the tax relief available on medical insurance premia.

For medical insurance policies renewed or taken out on or after October 16th 2013, the tax relief is limited to:

• the lesser of the premium paid or €1,000 per adult on the policy
• the lesser of the premium paid or €500 per child on the policy (A child means an individual under the age of 18 or, if over 18 and under 23 in full-time education and for who, a child premium is paid)

The tax relief is granted at 20% of the premium eligible for tax relief.

For the majority of people, this tax relief is granted at source through the Tax Relief at Source (TRS) system by paying a reduced premium to the authorised medical insurer. This reduction is equivalent to giving tax relief at 20%.

In certain circumstances, the TRS system will not apply e.g. where an employer pays the medical insurance premium on behalf of the employee or his/her dependents. In this instance, a Benefit in Kind charge arises. PAYE, PRSI and USC is deducted by the employer from earnings where the value of the benefit is notionally added to gross pay for deduction calculation purposes.

The employer pays the gross premium over to the insurer. The employee is therefore entitled to claim the tax relief in his or her tax credit certificate. This can be simply done by contacting his or her local Revenue office to make the claim either by phoning the PAYE phone service or submitting a claim form in writing.

More examples are shown here

For further information, please contact us at 091 778911 or via website contact page

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