Revenue Tax Briefing Issue 26, April 1997
Where a taxpayer makes payments to an authorised insurer under a contract of insurance which provides specifically for the reimbursement or discharge, in whole or in part, of actual medical, surgical or nursing expenses the taxpayer is entitled to income tax relief at the standard rate on the amount of premiums paid.
Where the premiums paid to the authorised insurer entitle the taxpayer to benefits other than such reimbursement, the amount of relief to be given is to be restricted to that portion of the premiums which provides cover for the reimbursement or discharge, of actual medical, surgical or nursing expenses.
Payment of benefits other than such reimbursement is generally made under what are commonly known as “cash plans”. Premiums or the part of the premium, paid in respect of such cash plans do not qualify for relief.
With effect from 1 July 1994, an authorised insurer means any undertaking entered in the Register of Health Benefits Undertaking established under Section 14 of the Health Insurance Act 1994 lawfully carrying on the business of insurance which provides for the reimbursement or discharge, in whole or in part, of actual medical, surgical or nursing expenses resulting from sickness of, or accident to, an individual, his/her spouse, children or dependants [or dependant of the spouse].
With effect from 1 July 1994, an authorised insurer also includes any undertaking which was authorised pursuant to three EU Directives and which was effected while the individual was not resident in the State but was resident in another Member State of the European Union.
The three directives are:
Up to the time of going to press, the Department of Health has advised that the following have been entered in the Register of Health Benefits Undertakings established under Section 14 of the Health Insurance Act 1994:
An authorised insurer in the context of contracts of medical insurance effected in another Member State of the EU is an insurance undertaking:
The question of establishing whether or not an insurance undertaking is duly authorised by the insurance supervisory authority of a Member State is a matter for the taxpayer.
Prior to the Health Insurance Act 1994, certain undertakings [i.e. other than those listed above] were considered to be authorised insurers for the purposes of relief under the provisions of Section 145 Income Tax Act 1967.
In cases where relief has been granted in respect of premiums payable under such undertakings, the relief may continue to be granted in respect of premiums paid up to 5 April 1997. As relief for medical insurance relief is on a preceding year basis, the tax year 1997/98 is the last year in which relief may be granted in respect of premiums payable on such undertakings [unless, of course, the undertakings are entered in the Register of Health Benefits Undertakings].