Why is health insurance taxed?

Pooinloo

If an employer is nice enough to provide health insurance, why should an employee pay tax on that? Shouldn't employer's covering health insurance be encouraged?

Padre_Pio

Pooinloo wrote: »

If an employer is nice enough to provide health insurance, why should an employee pay tax on that? Shouldn't employer's covering health insurance be encouraged?

Health insurance has a monetary value, therefore it's taxed same as any other payment that has a monetary value (with some small exceptions)

Allinall

Pooinloo wrote: »

If an employer is nice enough to provide health insurance, why should an employee pay tax on that? Shouldn't employer's covering health insurance be encouraged?

It’s no different to an employer giving you an extra €1,000 to enable you to get your own health insurance.

Why wouldn’t it be taxed?

Pooinloo

Allinall wrote: »

It’s no different to an employer giving you an extra €1,000 to enable you to get your own health insurance.

Why wouldn’t it be taxed?

It's very different. It's safeguarding your health. It's not a bonus scheme.

Allinall

Pooinloo wrote: »

It's very different. It's safeguarding your health. It's not a bonus scheme.

So is buying your own health insurance.

SEPT 23 1989

Another scrounger thread

Pooinloo

Allinall wrote: »

So is buying your own health insurance.

Of course it is, but you're completely ignoring the point of a person having something purchased for them, and then being penalised.

starbaby2003

You can claim tax relief on it. €1000 per adult and €500 per child

Pooinloo

SEPT 23 1989 wrote: »

Another scrounger thread

How is it a scrounger thread?

Stark

There was a time when the BIK tax was fully offset by the medical insurance tax relief (which was at whatever rate you paid). The socialists successfully lobbied against that saying it was unfair on those who only paid tax at standard rate so the relief was reduced to 20%. They've been lobbying for the same for pension tax relief, thankfully no success there so far.

Pooinloo

starbaby2003 wrote: »

You can claim tax relief on it. €1000 per adult and €500 per child

Nope it's 20% of 1000 per adult, and 20% of 500 per child.

starbaby2003

Pooinloo wrote: »

Nope it's 20% of 1000 per adult, and 20% of 500 per child.

That’s what I meant sorry.

Pooinloo

Stark wrote: »

There was a time when the BIK tax was fully offset by the medical insurance tax relief (which was at whatever rate you paid). The socialists successfully lobbied against that saying it was unfair on those who only paid tax at standard rate so the relief was reduced to 20%. They've been lobbying for the same for pension tax relief, thankfully no success there so far.

That's the problem with the 'they have a lollipop and we don't' brigade. They really care about getting a lollipop, it's more about taking from people who already have one.

Allinall

Pooinloo wrote: »

Of course it is, but you're completely ignoring the point of a person having something purchased for them, and then being penalised.

And you’re ignoring the point that it’s no different than your employer giving you the money to purchase it yourself.

Pooinloo

Allinall wrote: »

And you’re ignoring the point that it’s no different than your employer giving you the money to purchase it yourself.

So by that logic, shouldn't we be taxed on stationary, food or other perks that a company might provide?

Ten of Swords

Pooinloo wrote: »

So by that logic, shouldn't we be taxed on stationary, food or other perks that a company might provide?

You don't own the stationary, the company does

Free lunch is not a taxable benefit in kind provided it is offered to all employees

Allinall

Pooinloo wrote: »

So by that logic, shouldn't we be taxed on stationary, food or other perks that a company might provide?

You are taxed on any perks that you’re employer provides, if they’re not used exclusively for your job.

beejee

Pooinloo wrote: »

So by that logic, shouldn't we be taxed on stationary, food or other perks that a company might provide?

It's different because someone said so!

We aren't the worst country for taxation, but it's little consolation when you live here and not Zambia.

The more encompassing, intricate and complex taxation becomes, the more it encourages ducking, dodging, weaving and plain cash dealing.

Where they get you by the twiddly bits is the area of essentials like health care and provision. But even so, stay floating like a butterfly

Pooinloo

Allinall wrote: »

You are taxed on any perks that you’re employer provides, if they’re not used exclusively for your job.

That's not necessarily true, you pay alot of tax for a company car, which is only given if it's needed for work.

mcgucc22

starbaby2003 wrote:

That’s what I meant sorry.

I forgive you.

Pooinloo

Pooinloo wrote: »

That's not necessarily true, you pay alot of tax for a company car, which is only given if it's needed for work.

No not necessarily, sometimes cars are a perk of a job with the BIK tax paid depending on the business milage.

Allinall

Pooinloo wrote: »

That's not necessarily true, you pay alot of tax for a company car, which is only given if it's needed for work.

If you only use it for work- I.e. don’t take it home with you, then there’s no tax on it.

Pooinloo

Topgear on Dave wrote: »

No not necessarily, sometimes cars are a perk of a job with the BIK tax paid depending on the business milage.

Yup, and the taxation rates are extortionate. For example if you drive 24000 in a €30000 car, you'll be liable for around 10k on the year.

Idioteque

Pooinloo wrote: »

If an employer is nice enough to provide health insurance, why should an employee pay tax on that? Shouldn't employer's covering health insurance be encouraged?

How does it not encourage an employer to provide it? The employer doesn't pay the tax.

If an employee decides to not avail of the benefit, they'll most likely still pay a lot more to buy private health insurance themselves.

It's a win-win for the employer, they get to offer insurance which is generally an expected benefit from prospective employees. For those employees that don't want to avail of it that's fine too.

9935452

Pooinloo wrote: »

Yup, and the taxation rates are extortionate. For example if you drive 24000 in a €30000 car, you'll be liable for around 10k on the year.

10 grand a year tax bill ?

893bet

Pooinloo wrote: »

Nope it's 20% of 1000 per adult, and 20% of 500 per child.

If your employer is paying your insurance on your behalf (on pay slip) then do you automatically get relief and it’s factored in or do you need to claim it separately?

Stark

You need to claim separately.

Duke of Url

If your company is paying your health insurance, I dont think you can claim tax back on it.

893bet

Stark wrote: »

You need to claim separately.

So let’s say my company pays 2500 for me and my family per year.

Net cost to me is circa 1250 per year as that’s what’s deducted from me via the taxation system from my salary.

I can claim separately 20% on that 2500? How can I do this?

blackwhite

Pooinloo wrote: »

Yup, and the taxation rates are extortionate. For example if you drive 24000 in a €30000 car, you'll be liable for around 10k on the year.

No - if the business mileage is less than 24k km p.a. AND the car is available throughout the year for personal use also AND all running costs associated with the car are paid by the business, then the taxable benefit would be €10k, and the tax liability would be a max of €5,200.

If you do more 24000km for business purposes then the BIK assessable is reduced further.

Either way - tax is only liable if the car is also available for personal use - and €5200 is the guaranteed annual cost. No fuel to pay for, no insurance, tax or maintenance. And of course, not having to pay to buy the car in the first place.

Had a company car for nearly 10 years, absolute bargain compared to having to own and pay for one myself

blackwhite

893bet wrote: »

So let’s say my company pays 2500 for me and my family per year.

Net cost to me is circa 1250 per year as that’s what’s deducted from me via the taxation system from my salary.

I can claim separately 20% on that 2500? How can I do this?

The 20% is reduced from the price you pay to the insurance company.

If your company has paid €2,500 then the actual insurance cost is €3,125. The insurance company gets the €2,500 from you/your company, and the remaining 20% (€625) is paid by Dept of Finance from your taxes

9935452

blackwhite wrote: »

The 20% is reduced from the price you pay to the insurance company.

If your company has paid €2,500 then the actual insurance cost is €3,125. The insurance company gets the €2,500 from you/your company, and the remaining 20% (€625) is paid by Dept of Finance from your taxes

Are you sure about that.?
We get health insurance as a BIK and have been claiming the 20% back

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/medical-insurance-premiums/index.aspx

un5byh7sqpd2x0

blackwhite wrote: »

The 20% is reduced from the price you pay to the insurance company.

If your company has paid €2,500 then the actual insurance cost is €3,125. The insurance company gets the €2,500 from you/your company, and the remaining 20% (€625) is paid by Dept of Finance from your taxes

You are incorrect.

blackwhite

Apologies

I was thinking of my OHs situation - organised through work but set up is that policies are in individual's names and reimbursed by work.

Dravokivich

Rhea Deafening Kale wrote: »

You are incorrect.

What's the point in saying they are incorrect without showing why? I'm sure theres a few of us reading through this looking to understand it. But you're leaving us stumped here.

Guy:Incognito

Pooinloo wrote: »

It's very different. It's safeguarding your health. It's not a bonus scheme.

It's getting above and beyond what most people get and is not compulsory. Sounds like a bonus to be fair.

Seve OB

893bet wrote: »

So let’s say my company pays 2500 for me and my family per year.

Net cost to me is circa 1250 per year as that’s what’s deducted from me via the taxation system from my salary.

I can claim separately 20% on that 2500? How can I do this?

blackwhite wrote: »

The 20% is reduced from the price you pay to the insurance company.

If your company has paid €2,500 then the actual insurance cost is €3,125. The insurance company gets the €2,500 from you/your company, and the remaining 20% (€625) is paid by Dept of Finance from your taxes

9935452 wrote: »

Are you sure about that.?
We get health insurance as a BIK and have been claiming the 20% back

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/medical-insurance-premiums/index.aspx

Rhea Deafening Kale wrote: »

You are incorrect.

Actually blackwhite is more or less correct here. Figures could be slightly different depending of individuals on the policy.

Gross premium should be used to calculate BIK.
Co pays Ins company the net premium.
Co. Pays the revenue the tax relief amount
Employee claims a credit of 20% of the gross premium. Capped at 200 per adult and 100 per kid.

careless sherpa

starbaby2003 wrote: »

You can claim tax relief on it. €1000 per adult and €500 per child

I thought tax relief was already incorporated into the price

Seve OB

careless sherpa wrote: »

I thought tax relief was already incorporated into the price

Only if you pay it yourself
If it is a BIK then it needs to be grossed up.

Turkish1

Dravokivich wrote: »

What's the point in saying they are incorrect without showing why? I'm sure theres a few of us reading through this looking to understand it. But you're leaving us stumped here.

Hopefully a Simple example here.

Full value of health insurance policy is €1000.

Benefit provided by the company.

You will be assessed on a BIK of €1,000 in your payslips and in this example say higher rate of taxes applies (40% PAYE, 4% PRSI and 8% USC) so you will pay tax of €520 (€1,000*52%) on this benefit.

As you have been taxed on the full amount you are entitled to claim back a credit of 20% of €1,000 (max allowed per adult).

Ultimate cost to the employee through tax is 52% of €800 = €416 for a Policy worth €1,000

This can be done on revenue online and will essentially increase your tax credits for the year by €200. Remember you can claim for up to the last 4years if you have not done so.

Paid by you personally
For a €1,000 policy you will actually pay €800 to the insurance company (€1000-(€1000*20%)) and therefore you cannot claim any additional tax relief as you have already received this when paying the insurance company.

Above is from recollection and haven't looked at this in quite some time so open to correction.

un5byh7sqpd2x0

Dravokivich wrote: »

What's the point in saying they are incorrect without showing why? I'm sure theres a few of us reading through this looking to understand it. But you're leaving us stumped here.

Because 9935452 already linked to the explanation in the previous post, I was just reaffirming it. :rolleyes:

Seve OB

Rhea Deafening Kale wrote: »

Because 9935452 already linked to the explanation in the previous post, I was just reaffirming it. :rolleyes:

But you are incorrect.


As I explained above