VHI paid by employer - issue

miamee

Hi all,

I've been with my current employer for 1.5 years now. Part of my package was that they would pay in full for my VHI plan as it was a benefit I had in my previous employment. My plan is due for renewal in November every year. Today I got paid and my payslip states my wages and 'Medical Insurance (VHI)' in Payments section increasing my payments received, my taxes and as a result I have now received about €600 less than my normal monthly wage.

Is this the correct way for them to do this? It is odd that it is being done in August when the payment was made months ago and also it wasn't done this way last year, I have checked through all of my pay slips from last year. It's very possible that they have made a mistake, however I want to be a bit more sure of myself before I get on to them. If there is a possibility I owe them for last year's VHI too I'll say nothing but at the very least I should have been informed that this was coming out of my wages, it's a significant chunk. Any advice would be greatly appreciated, thank you.

Ronney

From Revenue.ie

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/health-and-age/medical-insurance-premiums/index.aspx

Policies paid by employers (as a benefit-in-kind)

Your employer may choose to pay medical insurance to an approved insurer for you or your family as a benefit-in-kind. If they do, you will:

• be taxed on the gross value of the policy or policies
• need to claim medical insurance tax relief from Revenue as it was not given at source.

Use myAccount to claim the credit(s) if your employer pays medical insurance relief for you or your family. You can make a claim during the year or after the year has ended.

Making a claim during the year:

• click the 'Manage your tax' link in PAYE Services
• select 'Claim tax credits'
• select 'Medical Insurance Relief' under the category 'Health'.

For 2019 and subsequent years:

• sign into myAccount
• click on 'Review your tax 2019-2022' link in PAYE Services
• request 'Statement of Liability'
• click on 'Complete Income Tax Return'
• in the 'Tax Credits & Reliefs' page select 'Health' and 'Medical Insurance Relief'
• complete and submit the form. 

You must provide the following information:

• the date the policy started
• who is covered on the policy and their ages
• a breakdown of the cost of the policy for each person
• the amount paid by your employer.

If your employer only pays a percentage of your policy cost the relief you can claim from us is restricted to that percentage. This is because the portion of the policy you pay yourself directly will have been discounted.

A list of approved health insurers is available on the Health Insurance Authority  website.

ongarite

Employer paid for health plans like VHI are subject to BIK tax

You have probably been charged the BIK for annual plan in one lump sum. Other employers charge monthly

ELM327

Its BIK. We pay our monthly and as the premium increased the monthlies increased. You pay 50% of the premium (assuming you're on the top rate) so if your premium paid by the employer was 2400, you'll pay c1200 per annum in tax, or 100 per month.

Seve OB

Sounds like it was an annual payment and as you say it was likely they made a mistake or more likely they didn’t know what they were doing and never charged you bik when it was paid. It probably been flagged now under audit or something so they are playing catch up to balance the books

miamee

Thanks guys, yes it was the full annual membership in one go.

Previous employer did it monthly so I guess I never noticed whatever the monthly tax paid on it was because I paid it every month. Our payroll is outsourced to a third party so I doubt they give two figs about informing a staff member that a lump was coming out of their wages. It hasn't even been paid to VHI recently so it came out of the blue. I really appreciate all of the responses. I'm still livid that they have chosen to do it the least helpful way but that is par for the course with these guys a lot of the time.

@Ronney very helpful post and I will get on that asap, cheers!

miamee

Just as an update to this, I wrote an email to the CEO and payroll complaining that I had been given no notice of this and could not reasonably have expected it given the VHI was paid months ago. CEO rang me to apologise and has arranged to lend back the money given to me which will be repaid to the company at a more palatable rate, i.e. not all at once.