Correction of tax assessments: the tax office may not offset health insurance bonuses

Bonus payments from a health insurance company do not always reduce the tax-deductible special expenses.

Correction of tax assessments: the tax office may not offset health insurance bonuses

Bonus payments from a health insurance company do not always reduce the tax-deductible special expenses. However, tax authorities have so far accepted this. Incorrect tax assessments are therefore now being corrected.

Whether membership in the gym, check-up or dental care: some health insurance companies reward their members with a cash bonus for health-conscious behavior, the so-called bonus payment. Such a payment has no effect on the tax return, according to the taxpayers' association with reference to the Federal Ministry of Finance.

Taxpayers can always include their health insurance contributions as special expenses in their tax return, which reduces the tax burden. Reimbursements from health insurance companies - in whatever form - had generally been deducted from these deductible special expenses in the past by the tax authorities. As a result, the tax relief was lower. But that is not always correct.

The decisive difference is whether the premium is a reimbursement of costs - for example, in the case of a bonus payment - or another reimbursement of contributions. Because the cash premium for health-conscious behavior granted by a statutory health insurance company must not reduce the special expenses according to the Federal Fiscal Court (Az.: Az. XR 16/18). Rather, the bonus payment is intended to compensate for the financial expense of the health measure. The tax authorities are now implementing this ruling.

As a result, income tax assessments in which the bonus payment has been deducted from the health insurance contributions must now be changed - for tax periods since 2016 inclusive. This means: Tax refunds can still be made here retrospectively. The health insurance companies have to change their notifications to the tax offices.

"Taxpayers, on the other hand, don't have to do anything, the tax offices and health insurance companies take action of their own accord," says Daniela Karbe-Gessler from the Taxpayers' Association. In the future, tax offices will have to check whether a repayment by the health insurance company to the taxpayer is a bonus payment or a refund of contributions.

(This article was first published on Wednesday, November 02, 2022.)