Noonan accused of misleading Dáil over health insurance tax reliefs

Fianna Fáil has accused Minister for Finance Michael Noonan of misleading the Dáil in his budget speech when announcing a cut to the tax relief available for health insurance contributions.

In his speech, Mr Noonan said the restriction would hit people on “gold-plated” insurance policies “while not affecting the majority of individuals who avail of more standard levels of medical cover”.

His assertion was challenged by Insurance Ireland, which represents the four health insurers, which claimed the capping of tax relief to €1,000 per adult and €500 per child would affect 90 per cent of policyholders. The largest insurer, VHI, has estimated that only 10 of its 93 policies would be unaffected.

Insurance Ireland says the measure, to be introduced immediately for policies at renewal, will add €100 to the amount paid by a person with a policy costing €1,500 before tax relief.

Later in the budget debate, Minister for Enterprise Richard Bruton said the Revenue Commissioners had estimated that the number of policyholders affected would be about 577,000, a little over half of all those with policies.

'Nonsense'
Fianna Fáil health spokesman Billy Kelleher said yesterday it was becoming increasingly clear that Mr Noonan had misled the Dáil. "The spin that this cut would only affect those on 'gold plated' schemes was clearly nonsense when it was first presented and has quickly disintegrated.

“Given that Minister Noonan’s colleague Richard Bruton has now confirmed that the cut will actually hit a majority of the country’s policyholders, I think that Michael Noonan should correct the record of the House and fully explain the impact of this decision.”

However, Mr Noonan’s spokesman said last night the measure would not affect “many” people on standard cover. For people on the VHI’s old Plan B, it wouldn’t make any difference, he insisted.

“Revenue estimate that approximately 50 per cent of policies will be affected. Some of these will only be affected to a minor extent. Also this only impacts on policies as they come up for renewal.”

A spokesman for the Health Insurance Authority, which regulates the sector, said its estimation of the number of people affected was close to that provided by Mr Bruton.

Meanwhile, Minister for Health James Reilly said the specific target saving of €113 million to achieve from a review of medical cards was given to him by the Cabinet.

Income limit
He said he invited officials from the Department of Public Expenditure and Department of Taoiseach to oversee spending on medical cards in his department. Anyone who had a medical card legitimately should have no reason to fear, he added. Dr Reilly said 49 per cent of those who lost a medical card recently were 200 per cent or more over the income limit.

He confirmed on Tuesday that up to 35,000 people over the age of 70 will lose their full medical cards, which will be replaced with a free GP card. He was unable to give an estimate of how many people will lose a card as a result of increased scrutiny of eligibility.

Dr Reilly is to appear before the Oireachtas health committee this morning to answer questions on his budget proposals.