Further to the annoucement to cap tax relief to just the first €1,000 for adults and €500 for children, many people have been left trying to figure out how this will effect their premiums, not least of all the insurers themselves who are scrambling to re issue prices to the market.  If you are due to renew anytime after the 15th of October, your policy will most likely have been effected as despite what the Minister for Finance may have said this will effect over 90% of plans in the market.  Of 230 plus plans only 19 currently remain unaffected.   Most of those plans are designed to cover Public Hospitals only.  With 80% of policy holders on plans that cover Public & Private Hospitals this measure will effect the vast majority of Private Health Insurance Policy Holders.

How does it work?

Up until the budget all health insurance premiums received a tax relief from the State of 20% up to no limit.

Therefore if your gross premium was €1,000 you received €200 tax relief

and

if your gross premiums was €10,000 you received €2,000 tax relief.

Tax relief was always given at source however so when you called an insurer, you were never quoted the gross price, only the net as the tax releif applied at source. Your gross premium would only have been quoted in your written renewal letter. This is where much of the confusion was caused when the new budget annoucement was made as people were not sure whether it applied to the net or gross premium (including the Minister for Finance in my opinion).

Under the new measure only the first €1,000 and first €500 will apply for tax relief, so how can you work out how you are effected?

Here is a simple way to work out how it effects you:

Adults

Find the annual net premium of your plan (this is available on www.hia.ie) and multiply it by 1.25 to get the gross annual premium. If it is over €1,000 simply subtract €200 to arrive at your new net premium as this is the maximum tax relief you will receive. If it is below €1,000, the original net premium is correct and remains unaffected.

Children

Again multiply the net annual premium by 1.25 to get the gross. If the gross premium is above €500 simply subtract €100 to arrive at your new net premium. If it is below €500, the original net premium is correct and remains unaffected.

Example

Plan B Options: 2 x Adults and 2 x Children

Current Adult Net Premium: €1,837

Current Adult Gross Premium: €1,837 x 1.25 = €2,296.25

New Adult Net Premium: €2,296.25 – €200 = €2,096.25

Adult Premium Increase: €259.25 or 14%

Current Child Net Premium: 397.25 x 1.25 = €496.56

New Child Net Premium: Premium remains unchanged as it is below €500 gross.

Total Increase on Policy: €518.50 per annum or 16%.

For further information on how this effects you, contact your insurer directly or talk to the experts here at Irish Health Insurance on 01 403 0700

Patrick Brennan

Irish Health Insurance