The Revenue Department has brushed aside a proposal from the Thai Life Assurance Association for an additional tax break on premiums paid to health insurance riders on life insurance policies worth up to 15,000 baht, said an informed source at the Finance Ministry.
The department will allow the tax break for a maximum of 100,000 baht on tax-deductible life insurance premiums to include health insurance riders, the source said. Under current tax breaks, life insurance policyholders with 10-year terms cannot claim deductions for premiums on health riders.
The tax-collecting agency disagreed with the association's proposal to allow an additional tax deduction of up to 15,000 for premiums paid to health insurance riders on life insurance policies, as such a move would be criticised for benefiting high-income earners, the source said.
Only premiums paid to a life insurance policy with coverage of 10 years or longer are tax-deductible.
Insurance holders who took out at a life insurance policy of at least 10 years with a health insurance rider before Jan 1, 2009 can also deduct the premium paid for health insurance coverage from their personal income tax. However, the combined premium must not exceed 100,000 baht per year.
In 2009 the Revenue Department revoked the tax deduction as it categorised health insurance as single-year coverage only, without built-in savings plans.
The benefits from permitting premium deductions to health insurance riders on life insurance policy from personal income tax are expected to be higher than the government's foregone revenue, the source said.
Allowing to deduct health insurance riders on life insurance policies can encourage people to take out the health insurance to cover medical bills, and lower fiscal burden in providing healthcare to people in the future and ease congestion at state-backed hospitals, the source said.
If the Finance Ministry agrees to include premiums paid for health insurance riders on life insurance policies under the 100,000-baht tax deduction, the Revenue Department must issue a ministerial announcement to pave the way for the tax break.
Apart from the 10-year term life insurance premium, premiums for pension life insurance policies are tax-deductible up to 200,000 baht, but the total, including contributions for retirement mutual funds and provident or pension funds, must not exceed 500,000.
