SimplePay has a built-in item to accommodate the special tax and reporting requirements related to permanent health insurance.
What is Permanent Health Insurance?
Permanent health insurance or permanent health benefit contributions are schemes which will continue to pay your employees’ income if they are absent due to illness or injury. Even better, using a Revenue approved scheme provider allows you to benefit from tax relief.
Tax Implications of Employee Contributions
If your employee contributes towards such a scheme, the premiums that they pay can be deducted from their income before calculating PAYE (but not PRSI or USC). It therefore reduces the PAYE payable by the employee.
Tax Implications of Employer Contributions
If the permanent health insurance scheme is authorised by Revenue, then employer contributions towards the scheme are not subject to PAYE or PRSI*. These are therefore non-taxable benefits-in-kind, which do not increase PAYE or PRSI contributions.
However, they are subject to USC and will therefore increase USC contributions.
*Please note: If the aggregate of your and your employee’s contributions exceed 10% of their income, the surplus is subject to both PAYE and PRSI.
If the permanent health insurance scheme is with a provider who is not Revenue approved, employer payments will be treated as taxable benefits-in- kind and employer contributions will be subject to PAYE, USC and PRSI.
You can find out more about permanent health insurance on this Revenue webpage.
Adding Permanent Health Insurance to PayslipsHow To Show contributions on SimplePay
When logged into SimplePay:
- Go to Employees and click on the name of an employee participating in the permanent health insurance scheme
- Click on Add next to Regular Inputs
- Select Permanent Health Insurance from the list of regular system items
- From the Revenue Scheme drop-down menu, select whether the scheme you’re partaking in is “Approved” or “Unapproved”
- Fill in the Employer Contribution and Employee Contribution fields
- Click Save.
The permanent health insurance contributions will now appear on the payslips for your employee and the correct tax treatment will be applied to them.