Angara files bill ensuring health insurance premiums are tax-free

Published December 4, 2018, 6:10 PM

by Roel Tibay

By Hannah Torregoza

Senator Juan Edgardo “Sonny” Angara has filed a bill that seeks to ensure that workers’ medical insurance premiums would remain tax-free.

Senator Juan Edgardo “Sonny” Angara (Facebook / MANILA BULLETIN)
Senator Juan Edgardo “Sonny” Angara
(Facebook / MANILA BULLETIN)

Angara, in filing Senate Bill No. 2112 or the proposed “Exempting Medical Insurance Premiums from Income Tax and Fringe Benefit Tax,” aims to ensure that health premiums paid by employers for their workers will remain tax-free despite the implementation of Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“It should be noted that RA 10963 did not amend the tax treatment of health premiums nor was it intended, in any way, to diminish the take-home pay of taxpayers by subjecting them to the P90,000 tax-exempt bonus,” said Angara who chairs the Senate committee on ways and means.

“The tax reform was enacted primarily to increase the purchasing power of each taxpayer who has been overburdened by the inequitable and unprogressive income tax that has not been changed for almost two decades,” Angara stressed.

Angara earlier chided the BIR for issuing Revenue Memorandum Circular (RMC) 50-2018 which taxed group health insurance premiums.

The senator noted that such issuance was not included among the provisions of the TRAIN law.

According to Angara, the said memorandum circular—which was originally issued to clarify concerns on the TRAIN’s income tax provisions—had only caused confusion as it specifically stated that the medical insurance premiums paid by the employer for its employees, whether rank and file or managerial or supervisory, and their dependents shall be included as part of bonuses and benefits, and therefore shall be subject to income and fringe benefit tax, according to Angara.

The RMC issued last May 11 stated that “premium on health card paid by the employer for all employees, whether rank and file or managerial or supervisory, under a group insurance should be included as part of other benefits of these employees which are subject to the P90,000 threshold.”

This means that medical insurance premiums paid by the employers for all employees should be subjected to income tax and fringe benefit tax.

Under the TRAIN law, the employees’ bonuses and other benefits amounting to P90,000 and below should be tax free. Beyond P90,000 threshold is already taxable.

Angara said the BIR circular, in effect, reverses its previous rulings and regulations that premium on health cards shall be tax-free.

“The tax reform was enacted primarily to increase the purchasing power of each taxpayer who has been overburdened by the inequitable and unprogressive income tax system that has not been changed for almost two decades,” Angara said in the explanatory note of his bill.

“The health of its citizens remain a primary concern of the government, thus, all support and assistance should be given to ensure that Filipinos, especially the workers, remain fit and healthy. In view of the foregoing, approval of this bill is earnestly sought,” he stressed.

 
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