In the Wednesday Club this week we spoke about one tax credit that not may people are aware of – Medical Insurance Tax Relief.
Some 2.3 million people in Ireland are current subscripting to Private Health Insurance.
Most subscribers are either paying their health insurance premiums directly to their health insurer or though there salary/wage deductions at work, in this case you are automatically receiving the Tax Relief at Source (TRS).
HOWEVER employees take note where your EMPLOYER pays or partly pays for your Medical Insurance, the Tax Relief at Source has not been given on this. What you can now is make a claim for this tax relief and it is given at the standard rate of 20% and you can go back 4 years to claim for this if applicable.
How does it impact on the employee’s entitlement to Tax Credits? This is best answered by way of examples below:
Example 1
The employer pays the full Medical Insurance for the Employee.
The renewal notice received by the Employer shows the net premium due of €1600 (gross amount €2000). The employer pays the Net premium to the Insurer and pays the balance of the gross amount to Revenue (€400)
The employee has not received the benefit of the TRS on this. The employee is entitled to claim a tax credit of €400 (€2000*20%) on his/her tax certificate.
Example 2
The employer pays half the medical insurance premium for the employee.
The renewal notice received by the Employer shows the net premium due of €1600 (gross amount €2000). The employer pays the total Net premium to the Insurer and pays the balance of the gross amount to Revenue ( €400).
The employee pays €1000 to the employer in respect of one half of the premium.
The employee has not received the benefit of the TRS on this. The employee is entitled to claim a tax credit of €400 (€2000*20%) on his/her tax certificate.