Revenue Note for Guidance

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Revenue Note for Guidance

470B Age-related relief for health insurance premiums

Summary

This section provides for age-related tax credit in respect of health insurance premiums paid under relevant contracts renewed or entered into on or after 1 January 2009 but before 1 January 2013, in respect of each insured person aged 50 years and over.

The relief operates under a relief at source (TRS) system, that is, the subscriber can deduct the age-related tax credit from the gross premium due. The amount deducted is refunded by the Revenue Commissioners to the authorised insurer.

Details

Definitions

(1)authorised insurer” is any undertaking entered in the Register of Health Benefits Undertakings which is lawfully carrying on health insurance in the State, and in particular cases, an undertaking authorised pursuant to the Third EU Directive on Non-Life Insurance where a policy of health insurance was taken out when the subscriber was not resident in the State but resident in another EU State, but excludes insurers offering dental insurance and also restricted membership undertakings within the meaning of section 2(1) of the Health Insurance Act 1994.

employee” and “employer” have the same meanings, respectively, as in section 983.

excluded contract of insurance” means—

  1. a contract of insurance which comes within the meaning of paragraph (d) of the definition of “health insurance contract” in section 2(1) of the Health Insurance Act 1994 (i.e. certain international contacts of insurance), or
  2. a contract of insurance relating solely to charges for public hospital in-patient services.

in-patient indemnity payment” has the same meaning as in section 2(1) of the Health Insurance Act 1994.

insured person”, in relation to a relevant contract, means an individual, the spouse or civil partner of the individual, or the children or other dependents of the individual or of the spouse of the individual, in respect of whom the relevant contract provides specifically, whether in conjunction with other benefits or not, for the reimbursement or discharge, in whole or in part, of actual health expenses (within the meaning of section 469).

PPS Number”, in relation to an individual, means that individual’s Personal Public Service Number within the meaning of section 262 of the Social Welfare Consolidation Act 2005.

relevant contract” is a contract of medical insurance (not being an excluded contract of insurance) which provides for the making of in-patient indemnity payments and which specifically (whether in conjunction with other benefits or not) for the making good, in whole or in part, of actual health expenses (within the meaning of section 469) of the individual, the individual’s spouse, or the children or other dependants of the individual or of the individual’s spouse.

relevant year of assessment” means—

  1. the year of assessment 2009, 2010, 2011 or 2012, or
  2. where a payment made to an authorised insurer is a monthly or other instalment towards the payment of the total annual premium due under a relevant contract, and the payment of such an instalment becomes due and is made in the year of assessment 2013, the year of assessment 2013.

relievable amount” determines the amount of the insurance premium which will qualify for the age-related tax credit. Where the premium covers only the making good of expenses covered in the definition of “relevant contract”, the whole of the premium qualifies. If some other benefit in addition to such re-imbursement were covered by the premium, an apportionment will be necessary. Relief is not allowed in respect of payments in so far as they are referable to benefits other than the making good of the expenses referred to in the definition of “relevant contract”.

restricted membership undertaking” has the same meaning as in section 2(1) of the Health Insurance Act 1994 (i.e. undertakings that deal only with particular groups of employees – membership is confined to employees and retired employees and their dependants).

(2) The age-related tax credit applies to health insurance premiums paid under relevant contracts renewed or entered into on or after 1 January 2009 and before 1 January 2013, that qualify for relief under section 470.

(3) Where an individual is entitled to age-related tax credit under this section, then, notwithstanding the bar on double relief in respect of the same payment set out in section 470(4), the age-related tax credit shall be given.

(4) Age-related tax credit is granted under this section where an individual or if the individual is married or a civil partner and jointly assessed under section 1017 or 1031C, the individual’s spouse or civil partner, has made a payment for a relevant year of assessment to an authorised insurer under a relevant contract renewed or entered into on or after 1 January 2009 but before 1 January 2013, in respect of an insured person aged 50 years or more. Subject to the operation of the TRS system, and to the provisions of subsection (5), the person making the payment is entitled in computing his/her income tax liability for that year of assessment to have that liability reduced (other than his/her tax liability in respect of tax withheld from annual payments under section 16(2)) by an amount equal to the amount of the age-related tax credit(s) that the individual is entitled to, subject to such a reduction being limited to reducing that liability to nil.

The reference to section 16(2) in this subsection ensures that tax deducted from annual payments is retained in charge against the person deducting it and the tax deducted is not diluted by the relief provided by the section.

The amount of the age-related tax credit varies according to the age of the insured person on the date the relevant contract is renewed or entered into, on the basis set out in the Table to the subsection. The Table can be summarised as follows:

TABLE

Age

Amount of age-related tax credit (Contract re-newed /entered into between 1 January 2009 and 31 December 2009)

Amount of age-related tax credit (Contract renewed / entered into on or after 1 January 2010)

Amount of age-related tax credit (Contract renewed / entered into on or after 1 January 2011)

Amount of age-related tax credit (Contract renewed / entered into on or after 1 January 2012)

Aged 50 years and over but less than 55 years on the date the relevant contract is renewed or entered into, as the case may be

€200

€200

Nil

Nil

Aged 55 years and over but less than 60 years on the date the relevant contract is renewed or entered into, as the case may be

€200

€200

Nil

Nil

Aged 60 years and over but less than 65 years on the date the relevant contract is renewed or entered into, as the case may be

€500

€525

€625

€600

Aged 65 years and over but less than 70 years on the date the relevant contract is renewed or entered into, as the case may be

€500

€525

€625

€975

Aged 70 years and over but less than 75 years on the date the relevant contract is renewed or entered into, as the case may be

€950

€975

€1,275

€1,400

Aged 75 years and over but less than 80 years on the date the relevant contract is renewed or entered into, as the case may be

€950

€975

€1,275

€2,025

Aged 80 years and over but less than 85 years on the date the relevant contract is renewed or entered into, as the case may be

€1,175

€1,250

€1,725

€2,400

Aged 85 years and over on the date the relevant contract is renewed or entered into, as the case may be

€1,175

€1,250

€1,725

€2,700

Where the premium paid to an authorised insurer is a monthly or other instalment towards the payment of the total annual premium due under the relevant contract, the age-related tax credit is pro rated depending on the frequency of the instalments (for example, where the total annual premium is paid in monthly instalments, the age-related tax credit will be one twelfth of the annual amount).

(5)(a) The amount of age-related tax credit given in respect of an insured person cannot exceed the actual amount of the premium, or, where relevant, part of the premium, paid in respect of that person.

(5)(b) This paragraph prevents an individual who pays, by way of instalment, an annual health insurance premium which falls due in 2011, and some of those instalments are made in 2012, from receiving any more age-related tax credit than he or she would have received if the annual premium had been paid in full in 2011.

(5)(c) This paragraph provides that where an employer pays a health insurance premium for an employee, and the employee is chargeable to income tax on the perquisite, any excess amount of the age-related tax credit(s) and standard-rated relief available under section 470, not required for set off against the income tax chargeable on the perquisite (in accordance with section 112 and 112A) is not available for set off against income tax chargeable on any other income.

Example

Gross premium

€2,500

Age-related tax credit

€500

€2,000

Tax relief at standard rate

€400

Net Premium

€1,600

Taxation of perquisite

Gross premium

€2,500

at employee’s marginal rate, say, 20%

€500

Tax credits due

Age-related

€500

Tax relief at standard rate

€400

€900

Excess

€400

This excess is not available for set off against income tax chargeable on any other income.

TRS system

(6)(a) Where a person is entitled to age-related tax credit(s) under subsection (4) in respect of a premium paid under a relevant contract renewed or entered into on or after 1 January 2009 but before 1 January 2012, the person obtains the relief by deducting an amount equivalent to the age-related tax credit(s) due.

(6)(b) The authorised insurer—

(a) regards the net amount of premium as discharging the person’s full liability in respect of the insurance cover, and

(b) may make a claim to recover from the Revenue Commissioners the equivalent of the amount retained by the subscriber.

(6)(c) The entitlement to deduct an amount equal to the age-related tax credit(s) due from the payment made to the authorised insurer is in addition to the entitlement to deduct an amount in accordance with section 470(3) (an amount equal to the appropriate percentage (standard rate of tax) of the payment net of any age-related tax credit or age-related tax credits due).

(6)(d) Where an individual makes a payment in respect of a premium due under a relevant contract renewed or entered into on or after 1 January 2009 but before the passing of the Health Insurance (Miscellaneous Provisions) Act 2009, the individual is deemed to have deducted and retained out of the payment an amount equal to the amount of the age-related tax credit(s) that the individual is entitled to under this section in respect of that payment.

Administration of relief

(7) The Revenue Commissioners shall make regulations in respect of the administration of this section particularly the operation of the TRS system. Every such regulation must be laid before Dáil Éireann.

(8) Where an amount of a refund is paid to an authorised insurer to which there is no entitlement, the amount is to be repaid by the insurer.

Relevant Date: Finance Act 2020