Company Paying Health Insurance Tax Query

Meath Centre Forward

I recently changed jobs.

In my old job, my employer paid the health insurance company directly on my behalf and I had some basic enough cover. It was completely looked after by HR in that company.

In the new job, I am covered up to a certain amount so I took out health insurance with Laya healthcare for an amount below that. I will now pay Laya in my monthly installments and my company then pays me that same amount in my installments.

The problem is I am going to be taxed on that money which the company pays me so I am actually going to end up paying the deficit myself to make up for the taxed amount if that makes sense. This is a lot different to my old job.

Is this the norm for companies that when they say they will pay your health insurance that you actually have to pay some of it yourself to make up for what's being taxed. It seems like a tax on health insurance to me. Like if I had no health insurance, I would pay no tax? The Revenue seem to be making money off me taking out health insurance which doesn't seem right?

Lockedout2

I presume that you understand that when your employer pays your VHI that it's a benefit of employment and is subject to BIK.

So you previous employer paid the VHI in full, say the premium was €1,000 the you pay tax on the €1,000 with a credit of health insurance of €200.

Your new employer pays the premium of €500 so you are taxed on the €500 and get a tax credit of €100.

It's the same as them paying you extra salary and you paying your own VHI.

Meath Centre Forward

Thanks for your response Lockedout2 however I'm still lost.

What exactly is the difference in the two jobs? Both said they cover healthcare but in the second one I end up paying part of the healthcare whereas in the first, it was all looked after by my employer.

Just to be clear I never paid any tax on the healthcare with my first employer.

Lockedout2

Don't know what the situation was with your previous employer but if there was no BIK on your payslip then they were not doing it right.

You should have been paying BIK on the VHI. If you think it's paying tax on health Insurance that's exactly what it is. A €1,000 paid in health insurance is the same as a €1,000 in salary increase.

Pawwed Rig

I would suspect that in your previous job you had the tax on the BIK deducted by your payroll and you just didn't realise it was happening.