I move:
That Dáil Éireann approves the following regulations in draft—
Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1981—
a copy of which regulations in draft was laid before the House on 18th March, 1981.
Subsection (3) of section 9 of the Health Contributions Act, 1979, provides that the Minister for Health may by regulations vary the health contribution rate and the ceiling level on which the maximum level of contributions payable in respect of an individual in any particular contribution year is assessed. Subsection (5) of section 9 requires that a draft of the proposed regulations shall be laid before each House of the Oireachtas and that the regulations shall not be made until a resolution approving of the draft has been passed by each House.
The original ceiling level specified in the Health Contributions Act, 1970, was £5,000. This was varied to £5,500 before income related health contributions came into operation in respect of the contribution year commencing 6 April 1979. That sum was varied to £7,000 under regulations approved by the Oireachtas in March 1980, and applied to the contribution year commencing 6 April 1980.
The proposed new ceiling figure is £8,500 and it is intended that this will apply for the contribution year commencing 6 April 1981.
The present rate of health contribution is one per cent, the same level as was fixed for the contribution year 1979-80. It is not being proposed that any change in the contribution rate will be made in respect of the contribution year 1981-82.
The proposed ceiling of £8,500 is the same as that specified in the Social Welfare (Amendment) Bill, 1981, which has been passed by the Dáil and is to be debated tomorrow in the Seanad. It is proposed that the new ceiling for social insurance purposes will also operate from 6 April 1981. The same considerations apply in the case of the proposed health contributions ceiling, as the basis for determination of variations in the ceiling levels in both codes is identical. When determining the income ceiling for any given year I am statutorily obliged to take account of any movement in the Transportable Goods (Earnings) Index. In the year ending March 1980, the latest available date, earnings increased by approximately 20 per cent. Accordingly the ceiling of £7,000 when increased by 20 per cent becomes approximately £8,500.
For the purposes of collection of health contributions income is divided into three streams:—
I—Income which is liable for income 1 158tax under the PAYE system and which is tax under the PAYE system and which is derived from insurable employment.
II—Income which is liable for income tax under the PAYE system but which is not derived from insurable employment.
III—Income which does not fall within the previous categories such as income from farming, the income of self-employed persons and investment income.
As I explained last year, the collection of health contributions from employees is integrated with the administrative machinery for the collection of pay-related social insurance contributions and redundancy contributions through the PAYE system. It is necessary that the ceiling levels for social insurance, redundancy and health contributions should be identical, otherwise the administration of the collection system would be more costly and far more cumbersome. The co-ordinated arrangements also facilitate employers in the administrative processes involved at their end.
The collection of health contributions from individuals with income which is liable for income tax, but which is not derived from insurable employment, is arranged through the tax collection system. The collection of health contributions in respect of income derived from farming is administered by health boards.
The revised ceiling level as it affects employees will be the same in the case of the self-employed, farmers and other individuals who are not insured under the Social Welfare Acts and the draft regulations provide accordingly. The purpose of the ceiling level is to fix an upper limit on the amount of the health contributions payable in respect of any one individual in a particular contribution year.
The total amount received in health contributions in the calendar year 1980 was £44.7 million. It is estimated that the total amount which will be received in the calendar year 1981 will be £48.6 million. Part of the estimated increase in 1981, about £700,000, is attributable to the raising of the ceiling level from £5,500 to £7,000 in 1980.
The balance is attributable to the additional receipts deriving from increases in incomes generally. The amount which it is estimated will accrue in the contribution year 1981-82 from the raising of the income ceiling is £800,000.
The proposed ceiling level of £8,500 is the same as that which it is proposed will also apply to health eligibility. In accordance with the terms of paragraph 32 of the Second National Understanding for Economic and Social Development it is intended that the statutory health eligibility limit will be increased from £7,000 to £8,500 with effect from 1 June 1981; the relevant income being that earned in the year ended 5 April 1981. The income ceiling for health contributions applies to the year ending 5 April 1982 and the relevant income is that earned in the year ended 5 April 1982.
The reasons for the difference between the operational dates mentioned are, firstly, that it is necessary in the case of health contributions to comply with the statutory provisions that the ceiling level change operates from the beginning of the contribution year, that is 6 April 1981. Secondly, it is necessary to have provision for a June commencement date in the case of health eligibility so that in appropriate instances individuals can have available their forms P.60 as evidence of their income in the tax year ended 5 April 1981.
The position as regards eligibility for health services is that persons with income below the limit are entitled to the full range of hospital services in a public ward and to specialist diagnostic and treatment services on an out-patient basis without charge. Persons over the income limit are entitled to the same range of services but are liable to pay fees to consultants. The community as a whole is also entitled to avail of the drugs refund scheme and free drugs for specified long-term illnesses. Preventive services and infectious diseases services are also available free of charge.
In my remarks I have, by way of giving general information to Deputies referred to certain matters which do not affect the draft regulations now before the House. As I have explained, the purpose of the draft regulations is to fix the upper limit on the amount of the health contributions payable in respect of any one individual in the contribution year commencing 6 April 1981. I now ask the House to approve of the Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1981 in draft.