Ireland Mulls Health Tax Reforms

by Amanda Banks, Tax-News.com, London

04 November 2008

Finance Minister Brian Lenihan may grant higher tax breaks for elderly patients in the next Finance Bill to offset an increase in health insurance premiums.

The move follows a Supreme Court ruling in July, which stated that the risk-equalisation system was based on a misinterpretation of law. As a result, those over 60 years of age, who are more likely to need medical treatment, face increases in their insurance premiums of up to 60%.

According to Ireland's Independent newspaper, the tax changes would seek to offset the cost of these higher premiums for elderly patients, but could come at the cost of lower tax credits for younger and healthier health insurance policy holders. It is expected that tax breaks will be paid directly to the insurance company upon treatment.

The changes are expected to cost the Irish Government around EUR1,300 per person over the age of 60 who would receive tax credits of around 50%.

The measures are being discussed by the cabinet this week, but a decision is not expected to be reached on new legislation until next week.

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