Vol. 382 No. 6
asked the Minister for Finance if he will make a statement on the apparent attempts by medical consultants to evade the withholding tax by persuading patients to pay bills directly; the steps he is taking to ensure that the tax is not passed on to patients as promised in the debate on the Finance Bill; and if he will make a statement on the matter.
31.
asked the Minister for Finance if consultants in a number of hospitals have written to the VHI warning that they will not accept direct fee payments because they feel it will result in a serious breach of the doctor/patient relationship; and if he will make a statement on the matter.
39.
(Limerick East) asked the Minister for Finance if his attention has been drawn to the difficulties being caused by the extension of withholding tax to payments made by the VHI to their members in respect of medical treatment; if it is his intention to introduce regulations to facilitate the operation of his new method of tax collection; and if he will make a statement on the matter.
I propose to take Questions Nos. 3, 31 and 39 together.
The extension of the withholding tax to certain payments under health insurance policies is provided for in section 8 of the Finance Act, 1988. To facilitate the operation of the withholding tax the legislation requires a health insurer, where a claim under a contract of insurance has been submitted and accepted, to discharge that claim, in so far as it relates to fees for specified medical expenses, by paying the medical professional directly. Tax is deducted at the rate of 35 per cent from this payment. This is a statutory requirement as passed by the Oireachtas and the legislation does not provide for any alternative system. Health insurers are, therefore, required to make the deduction in all relevant cases and the tax deducted will be remitted to the Revenue Commissioners.
The legislation also provides that in the event of a subscriber making a payment to a medical professional prior to his claim being processed by the insurer the latter must still pay the medical professional directly and the professional is statutorily required to make a refund of this amount, inclusive of withholding tax, to the subscriber. This is an important protection for the subscriber in the event of direct payment by him. I would point out that in the past, in most cases, subscribers have not paid their consultants prior to their insurance claim being processed and the Voluntary Health Insurance Company have advised members that, under the new arrangements, subscribers should submit unpaid accounts in support of claims.
I am informed by the VHI that a small number of doctors have written to the company indicating their unwillingness to accept direct payment from the VHI. Many other doctors have, however, indicated their willingness to co-operate with the new system. In fact over 70 per cent of the relevant doctors have already furnished their tax numbers to the VHI as is required under the terms of the withholding tax legislation.
I am not aware, therefore, of any significant difficulties for subscribers as a result of the introduction of the new system. Deputies can be assured however that I am closely monitoring the operation of the scheme. As Deputies are aware, I have power under the legislation to make regulations and I will not hesitate to use this power to ensure in particular that the position of subscribers is not adversely affected. As a contingency measure preparatory work on regulations is under way.
I have noted recent statements in the press on behalf of some medical professionals concerned in relation to the new system of payment. I would like to stress that the system does not affect in any way confidentiality in the doctor/patient relationship. In particular it does not involve the transmission of any additional information by the medical professional to the health insurer in relation to the medical complaint of the subscriber. The Revenue Commissioners will receive absolutely no information in relation to the subscriber.
Overall, the statutory arrangements which have been put in place for the application of the withholding tax to payments under health insurance policies represent the most effective procedure for applying the tax and will not, as I have said, damage the existing doctor/patient relationship. I would urge the full co-operation of all relevant persons in the implementation of the arrangements.
Since the Minister acknowledges that at least some patients have been paying medical practitioners directly and at least some medical practitioners are unwilling to accept the new tax regime, would the Minister issue a public statement advising VHI subscribers not to pay their consultants directly but to pay through the VHI, thereby ensuring that all due taxes are deducted? Secondly, as the Minister acknowledges that some medical practitioners are unwilling to accept direct payment, what does he propose to do about that? Public statements have been made in the press indicating that unwillingness to comply with the law of the land?
As the Deputy has rightly said, very few people are doing other than what the legislation requires them to do. I hope they will all row in with what is now prescribed by law. The VHI have already advised subscribers to submit unpaid accounts with their claims and that is the position. Through the replies and the information given in this House, through the questions by Deputy Howlin and others, I am sure the public will be further informed about the legislation and what it is intended to do.
What about those who are unwilling to accept the new regime?
They will be very few.
(Limerick East): Priority Question No. 39 is in my name and I would like to ask some supplementaries to it. May I ask the Minister if any money which is being withheld by the VHI since the enactment of the Finance Act on 6 June has been remitted to the Revenue Commissioners and, if so, how much? The Minister indicated that he has taken the precaution of asking the officers of his Department to begin preparatory work on regulations if such regulations prove necessary. What are the guidelines he has given to his civil servants in the preparation of these regulations?
In relation to the first part of the question, I do not think the payments will arise until 15 July. There would be no payments from the VHI to the Revenue Commissioners yet.
(Limerick East): Is that an administrative arrangement between the Department, Revenue and the VHI?
It is more an administrative arrangement between the VHI and the consultants who work for them. It came in on 6 June and obviously monthly payments will start to be paid as and from 15 July — I think that is the way it works but do not take it as gospel; the date 15 July is in my head — and it is not until that day that the trigger mechanism will take place.
As regards the regulations which may or may not be required; the criteria are being worked on at the moment between Revenue, Finance and the VHI, as was stated by the Taoiseach to the Deputy on the Order of Business one day. I hope, and it is the hope of everybody concerned, including most of the professionals, that the system will work. If it works according to the legislation passed in this House, there will be no need for any regulations.
(Limerick East): The Minister said preparatory work had commenced in his Department on the regulations. I presume his civil servants are operating under guidelines, and I would like him to confirm that he has instructed his civil servants to ensure that VHI members do not have to pay extra for medical treatment as a result of this tax. This should be the primary purpose of any regulation he would introduce.
I can confirm that would be the case. I understood the guidelines to the preparation of any of these regulations were to ensure that the intent of the legislation is fully operational for the protection of the patients.
(Limerick East): Is the Minister aware that certain organisations, and members of organisations representing medical consultants, intend that their members should not sign the appropriate forms which enable patients to claim from the VHI? Consequently the trigger mechanism to get one's payment if one is a member of the VHI will not be activated. Has the Minister any plans to solve this problem?
There have been lots of speculation and threats of legal action over the last number of months — we had the same in relation to other professionals last year when the withholding tax was introduced. Most of what is being said at the moment is mere speculation. As far as we gather, the system will work according to the law and we have the protective mechanism, through the regulations, if it does not work. As I said, I hope the legislation as adopted will be applied and that there will be no necessity for the introduction of any regulations. However, if they are required, they will be introduced.
(Limerick East): I want to press that last point. I understand there is a proposal that medical consultants would not sign the form and, as members of the VHI know, the signature of the consultant is required on the appropriate form indicating medical treatment has been carried out, before the VHI will pay money to members. Is the Minister aware of this? If so, what steps does he intend to take to ensure that claims can be made under an authorised signature?
I am not aware of anything like that but, as I said, it will be the intention of all concerned, particularly those in the VHI, to ensure that the legislation is applied. Where it is shown that this legislation is not being applied, we have this power. I cannot go any further than that today because at the moment, with the exception of very few cases, the legislation as adopted is being applied and operated.
