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Why is health insurance taxed?

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    #32
    9935452
    Registered Users Posts: 2,749 ✭✭✭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


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    #33
    un5byh7sqpd2x0
    Closed Accounts Posts: 1,862 ✭✭✭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.


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    #34
    blackwhite
    Registered Users Posts: 8,499 ✭✭✭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.


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    #35
    Dravokivich
    Moderators, Category Moderators, Music Moderators, Politics Moderators, Society & Culture Moderators Posts: 22,360 CMod ✭✭✭✭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. :(


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    #36
    Guy:Incognito
    Registered Users Posts: 38,247 ✭✭✭✭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.


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    #37
    Seve OB
    Registered Users Posts: 15,829 ✭✭✭✭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.


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    #38
    careless sherpa
    Closed Accounts Posts: 373 ✭✭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


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    #39
    Seve OB
    Registered Users Posts: 15,829 ✭✭✭✭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.


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    #40
    Turkish1
    Registered Users Posts: 273 ✭✭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.


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    #41
    un5byh7sqpd2x0
    Closed Accounts Posts: 1,862 ✭✭✭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:


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    #42
    Seve OB
    Registered Users Posts: 15,829 ✭✭✭✭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


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