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The Hong Kong Government has released a report on its consultations regarding a proposed Voluntary Health Insurance Scheme (VHIS), summarizing the consultation outcomes and proposing tax breaks.
The Government conducted a public consultation on the VHIS from December 15, 2014, to April 16, 2015, recommending that insurers selling and/or effecting individual hospital insurance would be required to comply with a prescribed set of VHIS Minimum Requirements.
There has been, it was said, "broad support for the concept and policy objectives of the VHIS in general, … [with] overwhelming support for the proposal of providing tax concessions for VHIS-compliant policies."
The consultation document proposed a tax deduction for premiums paid for all individual hospital insurance policies that meet or exceed the Minimum Requirements. There would be a HKD3,600 (USD465) annual ceiling on claimable premiums; a person could claim a tax deduction on his/her own policy and/or dependents' policies; the proposed tax deduction would be provided on a per-person-insured basis; and the claims for tax deductions for dependents' policies would be capped at no more than three dependents per taxpayer.
It was estimated that, based on an estimate of about 570,000 taxpayers and 360,000 dependents eligible for tax deduction, the annual tax revenue forgone would be HKD256m (in 2012 constant prices), with an average tax benefit per eligible taxpayer of about HKD450.
During the consultation, it was disclosed that many submissions considered that the tax concession should be enhanced to attract more young and healthy people to take out insurance under the VHIS, for example by setting a higher annual ceiling on claimable premiums, or relaxing the cap on the number of dependents' policies.
On January 9, when releasing the consultation report, a Food and Health Bureau spokesman confirmed that the agency "will establish a VHIS Office to certify those products that are VHIS-compliant, which would be eligible for tax deduction. We aim to finalize the VHIS practice guidelines and details of the tax deduction arrangement in 2018."
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