Medical Insurance Premiums paid by Employer – Where an employer pays medical insurance premiums (as a benefit), on behalf of an employee and/or his or her dependants, a Benefit in Kind charge will arise. PAYE, PRSI and Universal Social Charge (USC) will be deducted by the employer in respect of the value of the benefit provided.
In these circumstances, the employee has not benefited from the tax relief arising on the medical insurance premium paid by the employer and he or she is entitled to tax relief in his or her tax credit certificate (TCC).
There is a limit on the amount of tax relief available on medical insurance premiums for policies renewed, or entered into, on or after 16 October 2013. Medical insurance providers calculate the amount of medical insurance eligible for tax relief paid by the employer based on the number of adults and children covered by the policy and advise employers of the relevant figures.
Changes to Medical Insurance Relief for policies Renewed, or Entered Into, on or after 1 May 2015
In March 2015, the Minister for Finance announced his intention to amend tax relief for medical insurance premiums for young adults from 1 May 2015 on foot of changes introduced under the Health Insurance (Amendment) Act 2014. Revenue has agreed to operate the changes on an administrative basis pending the provision of the underpinning legislation as part of the next Finance Bill.
For policies renewed, or entered into, on or after 1 May 2015, the full adult maximum tax relief amount of €1,000, or the relevant premium where this is lower, applies for all individuals aged 21 and over, even if they are availing of a reduced premium rate below the full adult price. (A person under 21 years of age availing of a reduced premium rate below the full adult price continues to be entitled to the maximum amount of €500, or the relevant premium where it is lower).
When calculating the tax relief applicable to policies renewed, or entered into, on or after 1 May 2015, medical insurance providers will factor in this change.
Revenue’s two guidance documents, Medical Insurance – Information for Employers (PDF, 289 KB) and Medical Insurance – Information for Employees (PDF, 273 KB) have been updated accordingly.
For further information and assistance on processing payroll for employees, speak to Niamh on +353 (0)41 68 63 000 or Request a callback from our Payroll Team today.
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