For people on low incomes and with limited assets, the health insurance premium is partially subsidised through the healthcare allowance. Once you have applied for it, the healthcare allowance is paid out by the Tax Office/Benefits.
Means test for healthcare allowance
The means test for healthcare allowance is very straightforward. If your assets exceed the threshold set for the means test, you are not entitled to healthcare allowance. If your assets are below the threshold, your entitlement to healthcare allowance depends on the level of your income. The lower your income, the more healthcare allowance you will receive.
For 2018, the means test for the healthcare allowance is carried out by Minister for Medical Care, Bruins set at the tax-free allowance plus €83,415. The tax-free allowance is the portion of assets on which no tax is payable under Box 3 (income from savings and investments). If the tax plans for 2018 pass through parliament unamended, the tax-free allowance will be increased to €30,000 (2017: €25,000) per taxpayer.
The income used for the means test for the healthcare allowance is then calculated as follows benefit partners at €60,000 + €83,415 = € 143.415. For them, the joint assets in Box 3 are the deciding factor.
Do you not have a partner for the purposes of the healthcare allowance? In that case, the asset limit for the healthcare allowance means test is: €30,000 + €83,415 = € 113.415.
PLEASE NOTE (1): the boundary is razor-sharp!
The decisive factor is the value of your assets as at 1 January 2018, which is included in the basis for income from savings and investments (Box 3). If that value is €1 higher than the asset threshold for healthcare allowance, you will not be entitled to healthcare allowance at all for the whole year.
Box 3
For the means test for the healthcare allowance, your assets in Box 3 are decisive. This box includes your savings, your investments, your holiday home, property let out, and so on. Naturally, when determining your assets, you must deduct your Box 3 liabilities from your assets.
If your assets in Box 3 are likely to exceed the asset test threshold, whilst you would otherwise be entitled to healthcare allowance on the basis of your income, it is important to ensure that your assets in Box 3 are reduced before 1 January 2018. The best way to do this depends on your personal circumstances and preferences.
You can do this by giving away your assets. There are plenty of charities, and if they have ANBI status, you may also be able to claim the donation as a tax deduction against your income in box 1. Your children can also be the beneficiaries, but in that case you cannot claim the donation as a tax deduction against your income. Please also note the gift tax.
You can also buy items that you do not need to declare in Box 3. These include movable property for personal use (for example, a car, boat or caravan that you use yourself, or art that you hang on your wall). Box 3 includes an exemption for green investments and for works of art and science. Forests and nature reserves are also exempt under Box 3.
In addition, you can transfer assets from Box 3 to Box 2. To do this, you transfer the assets (or part of them) to a private limited company (or an open-ended mutual fund). Alternatively, you can lend money to your private limited company.
Finally, you can transfer assets from Box 3 to Box 1. You can do this by investing in the business or activity, or by paying into your pension or annuity scheme.
The transfer of assets from Box 3 to Box 1 or Box 2 must not be regarded as box hopping qualify.
PLEASE NOTE: housing benefit
The same applies to the housing benefit A means test applies. This is set at a much lower threshold than the means test for the healthcare allowance.
To be eligible for housing benefit, your assets in Box 3 must remain below the tax-free allowance (€30,000, or €60,000 if you are with your tax partner). This threshold is also extremely strict: if your assets in Box 3 exceed the tax-free allowance by as little as €1, you will not be entitled to housing benefit for the whole year.