BIR restores non-taxable status of health insurance premiums

The Bureau of Internal Revenue (BIR) has restored the non-taxable status of health insurance by removing the tax on health card premiums shouldered by employers.

It issued on Thursday, November 29, a new order superseding a previous memorandum circular on taxing health insurance premiums.

BIR Commissioner Caesar Dulay told GMA News Online on Friday that the bureau issued Revenue Memorandum Circular  96-2018 amid the flak and public clamor against RMC 50-2018.

“The backlash is why it was there in the RMC,” Dulay said.

On November 25, Senator Sonny Angara asked the BIR to withdraw its revenue memorandum circular which states that premiums on health cards shall be subject to tax.

Angara chairs the Senate Ways and Means Committee.

Revenue Memorandum Circular (RMC) No. 96-2018 deleted a provision in RMC No. 50-2018, which said that the “premium on health card paid by the employer for all employees ... shall be included as part of other benefits which are subject to the P90,000 threshold.”

Under the Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, employees’ 13th month pay, other bonuses, and benefits amounting to P90,000 are tax-exempt.

In RMC 96-2018, the BIR recognized that the provisions on health insurance premiums in RMC 50-2018—issued last May—“were not affected by the provisions of the TRAIN” law and “are hereby deleted from the RMC 50-2018.”

“Kahit isa-isahin natin ang mga pahina ng RA 10963, hindi po natin makikita doon na dapat buwisan ang mga HMO o health card benefits. Kaya’t nananawagan tayo sa BIR na klaruhin na agad ang isyu na ito at patuloy na ipatupad ang tax-free health benefits,” the senator said.

“Sa laki ng gastusin sa pagpapagamot at pagpapa-ospital, hindi makatao na bubuwisan pa ang mga benepisyo na nakatutulong nang malaki para pangalagaan ang kalusugan ng bawat pamilyang Pilipino,” he added.

In a separate tax advisory on Thursday, the taxman said that the treatment of health insurance premiums will be the same as before RMC 50-2018 was issued. The “status quo is hereby maintained.” —VDS, GMA News