Medical Insurance Company Tax - What is this?

Woshy

We recently availed of VHI through my husbands work. He gets a subsidy of x amount per month added onto his gross salary. We then pay PAYE, PRSI and USC on this extra amount (which has come to a lot more than I thought unfortunately, making the cost to us of the VHI significantly higher than we budgeted for but I guess that's revenue for you). We're presuming that the medical insurance tax relief is applied at source making the premium lower but we're not 100% sure.

From his deductions they then deduct a VHI fee (which is slightly less than the subsidy added into his gross salary) and a Medical Insurance Company Tax which is about €38.

What on earth is this medical insurance company tax? The only info we can find from his work is that it is paid by his company directly to revenue but we can't figure out why. His work has am outsourced HR department so it takes about two weeks to get an answer from them (it can only be done by email) so we'll have a wait to hear back from them.

Anyone that we have talked to (friends or family) who pay for VHI through work in this way don't seem to have this on their payslips. We're stumped.

Alan Shore

When VHI is paid by an employer the employer has to cover the tax relief at source.

So if you paid the VHI yourself you might pay €800 (ie after 20% Tax Relief on medical insurance). Total cost €1,000.

Your husbands employer will compute BIK Based on €1,000 and then he can claim the €200 through tax credit for medical insurance.

Hope that helps.