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Benefit in Kind for Personal Medical Insurance

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  • 10-05-2023 11:36am
    #1
    El Gato De Negocios
    Registered Users Posts: 6,705 ✭✭✭


    Hi all.

    Im negotiating a job offer currently and one of the benefits is PMI for myself, my spouse and our two kids (6 & 4). How do I calculate how much BIK I would be paying on it? We have our own personal PMI cover currently and our monthly premium is €230. Total annual cost on the company plan is approx €4,000 annually. Im trying to figure out if I was to take the job and opt in to the scheme whether there would be any saving for me ie, would the BIK cost be less than Im currently paying on our personal policy.



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    #2
    coylemj
    Registered Users Posts: 25,355 ✭✭✭✭coylemj


    In general, benefits that you receive from your employer are taxable. Examples include company cars, loans, medical insurance premiums and childcare facilities. Most taxable employer benefits are added to your pay and taxed in the same way.

    Employer benefits that are not taxable include travel passes and bicycles provided under the Cycle to Work Scheme.

    https://www.revenue.ie/en/jobs-and-pensions/taxation-of-employer-benefits/index.aspx

    If you follow the link to the next page 'How employer benefits are taxed', it says this:

    Most employer benefits you receive are added to your pay and taxed in the same way. Your employer deducts Income Tax, Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the value of the benefit.

    Which I believe answers your question 'How do I calculate how much BIK I would be paying on it?'. The net cost you will have to work out yourself, based on your top rate of PAYE and USC and your current rate of PRSI.

    But if you're paying 40% PAYE, 4.5% USC and 4% PRSI (Class A) then your aggregate deductions will be 48.5% so your 4,000 benefit will increase your tax bill by 1,940 p.a. or 161.67 p.m. Which would represent a net saving of 68.33 p.m. over your current insurance plan.

    Post edited by coylemj on


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    #3
    El Gato De Negocios
    Registered Users Posts: 6,705 ✭✭✭El Gato De Negocios


    Hi there. Thanks a million for the detailed explanation. Yes, I would be in the higher tax bracket alright. Sounds like it would be a no brainer should I take the job as it has a better level of cover than our existing policy but will end up costing me less. Definitely something that will factor in when Im making my decision. Thanks again.



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