Tax relief on health hits €400m

THE PROVISION of tax relief for private health insurance is costing the Exchequer more than €400 million annually, it has emerged.

Minister for Finance Brian Lenihan told the Dáil last week that the cost of this relief in 2009 was about € 374 million. He said that a further €216 million was provided as part of the interim measures – which will run until the end of 2011 – introduced by the Government following the collapse of its plans for a risk equalisation scheme.

This scheme was designed to subsidise the cost of claims for older people covered by private health insurance. Nearly 2.2 million people have private health insurance in Ireland.

Mr Lenihan told Joan Burton of the Labour Party that the numbers availing of tax relief on private health insurance related to the number of policies issued.

He said it was not possible to compile a reliable count of the number of individual claimants.

“For 2008, the latest year for which it is available, the number of policies issued is provisionally estimated at 1,017,400,” he said.

In its briefing document drawn up as part of its reform plans for the health insurance sector, the Department of Health said private health insurance contributions had traditionally attracted “a certain level of income tax relief”. It said that tax relief was now set at the standard rate.

Mr Lenihan said the € 374 million bill for tax relief on medical insurance premiums did not include “the cost to the Exchequer of €216 million of the age-related tax relief at source”.

The total value of the tax relief in respect of policies commenced in 2009 was about €50 million.

This is funded by a levy imposed on health insurance companies in respect of each person insured.