Dáil Éireann Debate, Wednesday - 7 February 2024
112. Deputy Frankie Feighan asked the Minister for Finance if he will consider as part of his planning for Budget 2025 re-introducing the tax relief at €2,000 for persons paying tax in the State who have private health insurance and have experienced the dramatic price rises in their premiums in recent months. [5441/24]
View answerSection 470 of the Taxes Consolidation Act 1997 (TCA 1997) provides for 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 given as a reduction on the cost of the policy. This is known as tax relief at source, and under this treatment policy holders pay a reduced premium to the medical or dental insurer (i.e. pay the net of tax relief amount) and the authorised insurer makes a claim to Revenue for the tax relief granted at source to the policy holder.
Tax relief for medical insurance premiums is provided at the standard rate of income tax, of 20 per cent. The relief available is equal to the lesser of (a) 20 per cent of the cost of the policy or (b) 20 per cent of €1,000 per adult or €500 per child insured.
It should be noted that a child for the purpose of this credit is a child under 21 years of age in respect of whom a child premium has been paid.
The current ceilings on the premium values qualifying for tax relief were introduced in Budget 2014 as the cost of the tax relief had increased significantly in the years leading up to this change. In addition, despite the increasing cost of the relief, the numbers insured were estimated to have reduced by around 150,000 over the same period, while at the same time the level of medical cover had decreased on some policies. Against this background the increase in costs was unsustainable.
To answer the Deputy’s specific question, I have no current plans to enhance the relief. However, it is important to point out that the current ceilings ensure a level of continuing support via the tax system for those who purchased medical insurance policies, while reducing Exchequer exposure to more expensive policies. The relief is provided at source, which ensures that individuals on lower incomes can receive the full benefit of the available relief.
Finally, as the Deputy may be aware, the Commission of Taxation and Welfare recommended that in the context of the implementation of Sláintecare relief for private health insurance should be phased out over time. Further details are set out in the Commission’s report:
https://www.gov.ie/en/publication/7fbeb-report-of-the-commission/
