Noonan says 1.1 million hit by reduction in tax relief on health insurance premiums

Minister for Finance Michael Noonan has acknowledged that 1.1 million individuals will be affected by the Government's move to reduce tax relief on health insurance subscriptions.

In the budget the Government decided to place a cap of €1,000 on the level of health insurance premium which attracted tax relief for adults, and €500 for children. Up to then tax relief of 20 per cent was available for the full cost of health insurance policies.

The Government’s move saw an immediate rise in the net price paid for health insurance for people subscribing to plans costing more than €1,000.

Subscribers to the more expensive health insurance plans were hit hardest by the Government’s decision, with the net price for top-level plans increasing by about 20 per cent.

'Gold-plated'
In his budget speech Mr Noonan suggested that only people with "gold-plated" policies would feel the brunt of the changes. However there was some dispute as to how many people would be affected by the decision to reduce tax relief.

In a factfile published on its website after the budget the Department of Finance said the move would affect 577,000 policyholders. The health insurance industry argued the move would hit more than one million people as policies frequently covered more than one individual.

In an answer to a written parliamentary question this week, tabled by Brendan Ryan of the Labour Party, Mr Noonan accepted more than one million would be affected by the reduction in tax relief on health insurance subscriptions.

"I am advised by the Revenue Commissioners that based on 2012 data, the most up-to-date data available, it is estimated that up to 577,000 policyholders, which provide cover for 1.1 million individuals, may be affected by this measure."

'Its entirety'
Meanwhile, Minister for Health James Reilly said he was pleased the Minister for Finance "did not remove tax relief in its entirety".

In an answer to a separate parliamentary question by Lucinda Creighton, he said "the tax relief at source provided to policyholders has been a significant subsidy to the actual cost of premiums charged by health insurers".