The Association of Medical Insurance Intermediaries (AMII) is calling on the Chancellor George Osborne to remove the disincentives in the current tax treatment of employer-paid private medical insurance (PMI) ahead of this week’s Budget, as a way of alleviating some of the cost pressures on the National Health Service.
“The current tax treatment of employer funded PMI is not only inconsistent with how other forms of group risk insurance are treated, but is also a perfect example of taxation working against the good intentions of other Government initiatives,” commented Andrew Tripp, Chairman of AMII. “Removing the current tax disincentive for employers who wish to fund private healthcare for their employees, would not only have a positive effect on the public finances, by relieving pressure on over-stretched NHS budgets, but prompt access to treatment will also result in lower welfare costs for the Government.”
The previous Labour administration introduced the Employers National Insurance charge on employer-paid private medical insurance. This charge is due to increase to 13.8% from April this year and comes on top of the 1% increase in Insurance Premium Tax to 6% effective from January 2011. In addition, employees are also taxed on the cost of this benefit, as a P11D benefit-in-kind, at their marginal rate of tax. These tax charges are not applied to other group risk health insurance benefits – such as group income protection and group critical illness – or on health prevention benefits such as employee health screening.
Source : Amii Press Release
