Jim O'Callaghan (Dublin Bay South, Fianna Fail)
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72. To ask the Minister for Finance the estimated full-year cost of increasing the tax relief available on health insurance to 40%, or 40% of €2,000, which would be equal to a credit of €800; and the estimated cost of increasing the tax relief maximum to 20%, or 20% of €2,000, which would be equal to a credit of €400 in cases where health insurance is not paid by employers. [43414/24]

Jack Chambers (Dublin West, Fianna Fail)
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Section 470 of the Taxes Consolidation Act 1997 provides for tax relief in relation to payments made to authorised insurers under relevant contracts in respect of medical insurance and dental insurance.

Qualifying medical insurance policies can be for health insurance, dental insurance, or health and dental insurance combined.

Tax relief for medical insurance premiums is provided at the standard rate of income tax, currently 20 per cent. The relief available is equal to the lesser of (a) 20 per cent of the cost of the policy or (b) 20 per cent of €1,000 per adult or €500 per child insured.

It should be noted that a child for the purpose of this credit is a child under 21 years of age in respect of whom a child premium has been paid.

Generally, tax relief is given as a reduction on the cost of the insurance policy. This is known as tax relief at source, and under this treatment, policy holders pay a reduced premium to the medical or dental insurer (i.e. pay the net of tax relief amount) and the authorised insurer makes a claim to Revenue for the tax relief granted at source to the policy holder.

In cases where an individual’s medical or dental insurance premium is paid by their employer as a Benefit-in-Kind, the employee is still entitled to the relief, however, it is claimed by submitting an Income Tax Return to Revenue. Alternatively, an employee may claim relief during the year by contacting Revenue through MyEnquiries.

In 2022, the most recent year for which Revenue data are available, the cost of the tax relief for medical insurance premiums was €405.2 million.

Revenue advise that a tentative estimate of the cost of increasing the rate of relief from 20 per cent to 40 per cent and the ceiling of the relief from €1,000 per adult (or €500 per child) to €2,000 per adult (or €1,000 per child) would be an additional €720 million.

Furthermore, they advise that a tentative estimate of the cost of increasing the ceiling of the relief to €2,000 per adult (or €1,000 per child), with the standard 20 per cent rate of relief maintained, would be an additional €170 million.

It should be noted that these estimates relate only to cases where tax relief is granted at source. Such cases represent about 97% of the tax cost relating to tax relief on medical insurance premiums.