470A Relief for premiums under qualifying long-term care policies

Summary

This section provides tax relief in respect of premiums on qualifying insurance policies designed to cover – in whole or in part – future care needs of individuals who are unable to perform at least two activities of daily living or are suffering from severe cognitive impairment. The relief is given at the standard rate of income tax and operates under a relief at source system, that is, the subscriber can deduct the relief from the gross premium due. The amount deducted will be refunded by the Revenue Commissioners to the insurer. Benefits payable under a qualifying policy will not be taxable. Qualifying policies, which must be approved by the Revenue Commissioners, may be taken out by an individual in relation to himself or herself, his or her spouse and children and other relatives. This section will not apply for the year of assessment 2010 and subsequent years of assessment.

Definitions

(1) Some of the more important are—

“activities of daily living” means the normal activities of washing, dressing, feeding, toileting, mobility (moving around) and transferring (from bed to chair);

“long-term care services” means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services as well as maintenance or personal care services carried out by or on the advice of a practitioner;

“maintenance or personal care services” means any needed assistance with any of the disabilities as a result of which an individual is a “relevant individual”;

“practitioner” means a registered medical doctor;

“qualifying individual” is the proposer under the policy of insurance or his/her spouse or children or a relative of the proposer or of his/her spouse;

“qualifying insurer” means a life assurance undertaking authorised in the State or another EU state or under the EEA Agreement;

“qualifying long-term care policy” means a policy providing for reimbursement of long-term care services expenses for a relevant individual and which is approved of by the Revenue Commissioners in accordance with the section;

“relevant individual” means a qualifying individual under a qualifying long-term care policy who is medically certified as being unable to perform for at least 90 days at least 2 activities of daily living or who requires substantial supervision because of severe cognitive impairment.

Registration of insurers

(2) A person will not be a qualifying insurer until that person is entered in a register maintained by the Revenue for the purposes of the section and any associated regulations. Where the insurer is non-resident or not carrying on business in the State through a fixed place of business, it must appoint an agent in the State to discharge the insurer’s duties and obligations under the section and the regulations and must notify the Revenue Commissioners accordingly.

Approval of policy

(3) The Revenue Commissioners may not approve a policy for the purposes of the section unless they are satisfied as to the matters specified. These are that—

• the policy must only provide for the reimbursement or discharge of expenses of long-term care services for the relevant individual,
• the policy must only be terminable by the insurer on special terms listed in the policy,
• the policy requires that the individual must be tested by reference to at least 5 activities of daily living to determine if he/she is a relevant individual,
• the policy must not provide for any payments on termination, surrender or otherwise that can be paid or assigned, borrowed or pledged as collateral, and
• the policy must not be connected with another policy.

A policy may however provide for the payment of periodic amounts without regard to the expenses of the payment period.

(4) The Revenue Commissioners may approve standard forms of policies.

Relief subject to declaration

(6) An individual seeking the tax relief must first produce to the insurer a declaration which-

• is made and signed by the individual,
• is made in a form prescribed or authorised by the Revenue Commissioners,
• contains the declarer’s full name, the address of his or her permanent residence and his or her PPS Number,
• declares that at the time the declaration is made that he or she is resident in the State, and that the beneficiary under the policy is a qualifying individual in relation to the individual, and
• contains an undertaking that if, at any time while the long-term care policy is in force, the individual ceases to be resident in the State he or she will notify the qualifying insurer accordingly.

Retention of declarations

(7) Insurers must retain the declarations for a period of 6 years or 3 years after the policy ceases (whichever is the longer). The declarations may be called for, and inspected, by an inspector of taxes.

The relief

(5) & (8) Relief is to be by way of deduction from the gross premium – which the insurer is obliged to allow – and the insurer will be reimbursed by the Revenue Commissioners for the amount of the deduction.

Administration of relief

(9) The Revenue Commissioners shall make regulations dealing with the administration of the relief.

(10) Where an amount is paid by the Revenue Commissioners to a qualifying insurer which is not due, it is to be repaid by the insurer.

Bar on double relief

(11) Double tax relief in respect of the same payment is prevented.

(12) The Revenue Commissioners may delegate their functions under the section – other than the making of Regulations.

(13) This section will not apply for the year of assessment 2010 and subsequent years of assessment.

Relevant Date: Finance Act 2019