Firstly, decisions regarding tax matters are primarily a matter for my Department and the Office of the Revenue Commissioners. However, the Budget was agreed by the Government before its announcement on Budget day. As I stated in my Budget day speech, from 16 October 2013, tax relief for medical insurance premiums will be restricted to the first €1,000 per adult and the first €500 per child insured. Any portion of premium paid in excess of these ceilings will no longer qualify for tax relief.
The new ceilings will ensure some continuing support via the tax system for those who purchase medical insurance policies, while reducing Exchequer exposure to more expensive policies.
I am advised by the Revenue Commissioners that based on 2012 data, the most up to date data available, it is estimated that up to 577,000 policy holders, which equates to just under 53% of all policies, may be affected by this measure. The Revenue estimate is based on an analysis carried out on the annual returns and the gross premium prices (i.e. before tax relief at source is applied) submitted by the Health Insurers in respect of the 2012 tax year. The basis for the industry estimate is not known.
I should point out that many will only be affected marginally, depending on the cost of the policies that individuals purchase. In addition, individuals can of course opt for less expensive policies and therefore avoid the impact of this measure entirely.
The legislation underpinning the new ceilings has been included in Section 8 of Finance (No.2) Bill 2013.