Medical insurance scheme gets fresh push with tax breaks for Hong Kong workers
Details of the incentive came as finance chief Paul Chan also earmarked HK$300 billion for hospital redevelopment plan
People are being encouraged to join a long-awaited voluntary medical insurance scheme with tax deductions of up to HK$8,000 (US$1,025) on premiums per insured person.
Details of the tax incentive came as finance chief Paul Chan Mo-po announced the government had also earmarked HK$300 billion to cover the second 10-year hospital development plan of the Hospital Authority, which manages the city’s public hospitals.
The money would also be used to improve the Department of Health’s clinics and upgrade the city’s health care teaching facilities.
Recurrent expenditure on health will be HK$71.2 billion in the latest budget, including HK$61.5 billion for the authority.
Under the Voluntary Health Insurance Scheme, which aims to encourage more people to use private health services, the ceiling of the insurance premiums for tax deductions each year would be set at HK$8,000 per person. Premiums paid by taxpayers for themselves and their dependants, such as a spouse and children, would be eligible for tax deductions.
“There will not be a cap on the number of dependants eligible for the deduction,” a government source said. “We encourage families who are able to purchase insurance for different dependants.”
For example, if a person bought insurance for himself and three other family members, the capped amount of premium for tax deduction would be up to HK$32,000.
The source explained that the actual amount of reduced tax for a person would depend on the annual premium and the highest tax rate he or she was paying.
On the other hand, if a person paid HK$8,000 a year for medical insurance and was on the highest tax rate at 17 per cent, the actual amount of reduced tax would be HK$1,360.
The source said the capped level of tax-deductible premium at HK$8,000 should cover the full costs of premiums paid by people aged 60 or below.
The source expected insurance products meeting scheme requirements would be rolled out in the 2019-20 financial year.
“We expect 1.5 million people will join the insurance scheme in the first three years, and 1 million of them will benefit from the tax deduction arrangement,” said the source, adding that the lost government revenue would be HK$800 million a year.
The government will submit a proposed amendment to the current tax regulations to the Legislative Council in the second quarter this year, while the industry would need six to nine months to prepare.
The source said the scheme would cover people until age 100 and “unknown pre-existing conditions”.
Patients’ rights advocate Tim Pang Hung-cheong said more could be done over tax deductions.
“It could attract some people to purchase insurance,” Pang said. “But could the [tax-deductible] premium be increased to HK$10,000 to cover people aged 60 to 65 too?”
Both the Hong Kong Federation of Insurers and medical insurance company Bupa supported the tax incentives.
On the Hospital Authority’s 10.7 per cent increase in recurrent funding, the money would be used for different initiatives, such as adding 570 more beds in different hospitals and increasing quotas at general outpatient clinics by 55,000.
To meet an increasing demand for health care services, the authority would also start planning the second 10-year hospital development plan, which was expected to start in 2026.
The source said redevelopment of Princess Margaret Hospital and Tuen Mun Hospital, as well as construction of a new hospital at the King’s Park site where Queen Elizabeth Hospital is located, are likely to be included in the plan. Around 3,000 to 4,000 additional hospital beds are expected to be delivered from the plan.
Several health care schemes would also see expansion under the latest budget. Elderly residents would be allowed to accumulate the value of unspent health care vouchers from the current HK$4,000 to HK$5,000 to allow greater flexibility. An extra HK$1,000 worth of vouchers would be provided on a one-off basis to participants.
The colorectal cancer screening programme, which was launched as a pilot scheme in 2016, would be made regular and gradually expanded to cover people aged 50 to 75.
Around HK$54 million would also be spent to launch a three-year project for more NGOs to offer free oral check-ups and dental treatment for adults with intellectual disability.
Hospital Authority chairman Professor John Leong Chi-yan welcomed the increased funding and the commitment on the second hospital development plan.
Medical sector lawmaker Dr Pierre Chan said the government appeared to be more proactive in supporting health care services this time, but he said the authorities have neglected medical planning for a long time.