Dáil Éireann Debate, Thursday - 4 July 2024
198. Deputy Richard Boyd Barrett asked the Minister for Finance the estimated full-year cost of uncollected tax revenue as a result of individuals offsetting their private health insurance costs against tax liabilities. [28825/24]
View answerFirstly, it is important to clarify the position, which is that section 470 of the Taxes Consolidation Act 1997 (“TCA 1997”) provides for income tax relief in respect of payments made to authorised insurers under relevant contracts in respect of medical insurance and dental insurance.
Qualifying medical insurance policies can be for health insurance, dental insurance or health and dental insurance combined.
Tax relief is granted at the standard rate of tax (currently 20%) on the payment of the premium. The relief available is limited to the lesser of:
• the premium paid or €1,000 per adult, or
• the premium paid or €500 per child.
A child, for the purposes of this tax relief, is a child under 21 years of age in respect of whom a child premium has been paid.
In general, tax relief is given as a reduction on the cost of the insurance policy. This is known as tax relief at source (“TRS”) and under this treatment policy holders pay a reduced premium to the authorised insurer (i.e. pay an amount net of tax relief). The authorised insurer then makes a claim to Revenue for the tax relief granted at source to the policy holder. For example, the TRS in respect of a gross premium adult policy of €2,500 is €200 (i.e., €1,000 x 20%). Thus, in this case as TRS is applied, the individual will pay the authorised insurer €2,300 and the authorised insurer may claim the TRS of €200 from Revenue.
Detailed guidance on tax relief for qualifying medical insurance premiums can be found in Tax and Duty Manual Part 15-01-14, which can be accessed using the link –
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-14.pdf.
Finally, I would point out that the latest Revenue data (2021) estimates that the cost of tax relief for medical insurance was approximately €390 million and it was availed of by 1,350,987 claimants.
www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/costs-tax-expenditures.pdf .
