Gross Prem V Net Prem VHI Group Scheme Question.

geronimofinch

Afternoon,

I'm just querying whether my employer is making the correct deductions through the group scheme.

My net premium for the year is €906.99 Gross premium is €1133.74 but this amount was subject to tax relief at source. My policy renewed last December.

Last year's premium was €828. I was paying around €7 per fortnight last year. Employer was paying around €25. Deductions were based on the net premium.

This year I am paying €21.47 while my employer is paying €27.83. They're taking the gross premium figure into account. Shouldn't my deduction be based on the net premium?

Seems odd that I should be paying 3 times as much a fortnight this year than I was paying last year when the insurance has only jumped from €828 to €906?

Thanks,

Geronimo.

NuMarvel

From your post, it seems that your employer pays for some of your health insurance as a benefit of employment, with you paying the balance through salary. Any portion that you pay yourself should definitely be at the net rate, regardless of your method of payment or employer contribution.

That said, some of the figures don't add up. The combined fortnightly contributions added up over 26 pay periods come to €1281, which is just under €150 more than the gross premium. Also, assuming you're under 50, the tax relief is 20% so even if your employer is charging you the gross premium, the net premium would still seem to be incorrect based on the deductions.

It's probably best to talk to your payroll. Maybe they incorporated your BIK and deductions into one accidently or maybe your employer changed the proportion or amount that they cover as a benefit, resulting in the increased salary deductions.

geronimofinch

Talked to payroll. They informed that it was being deducted over 23 pay periods which would amount to the gross premium amount and not the net premium amount.

NuMarvel

That explains that part of it. Did they say why your contribution had jumped up by so much? By my reckoning, it should be somewhere in and around €8.60, based on 23 pay periods.

geronimofinch

They basically told me to contact VHI but from what I can understand, payroll are incorrectly setting the employers contribution and employees contribution against the gross premium where they should be set against the net premium.

Can you just confirm that both employer and employee contribution should be at the net premium rate of €906.99?

Thanks again.

NuMarvel

Definitely yes on the employee contribution. Because of the way that the tax relief is given, the employer contribution can be a bit more complicated, but that really shouldn't affect your contributions.

Sorry to keeping banging on about it though, but I still think there's something wrong with the proportion of employee/employer contribtions here. In the previous year, your employer paid approximately 78% of the premium, with you taking the balance. This year that seems to have been reduced to approximately 56%. Leaving aside the question about deductions being at gross or net level, that seems to be the main reason your contributions have jumped.

However, assuming that change in contribution is correct, then your deductions should be at the net rate. If you're going to contact VHI, I'd suggest talking to someone in VHI that administers your group scheme. This isn't a regular query that the average customer service agent would deal with everyday, so they probably won't have an answer for you straight off.

geronimofinch

Will do.

Thanks again for your help, NuMarvel.

broker2008

Figures aren't right - something has changed. Your premium only went up 10%.If company hasn't changed their components, the mistake is more than likely at their end.To get gross premium you multipy net premium x1.25. The bigger issue is that your plan is going to increase by over 20% at renewal. Change plan or change provider for better value