The Health Insurance Fund will stop accepting applications for tax-free income

On 15 May 2024, an amendment to the Income Tax Act will enter into force, ending the calculation of tax-free income for recipients of income taxable under the Health Insurance Act. This means that the Health Insurance Fund will no longer accept applications from people for tax-free income and will no longer calculate tax-free income from sickness and care allowances.

The purpose of the amendment is to avoid situations where the person submitting the application for tax-free income has entered an excessively high amount of tax-free income on the application form, which means that they will have to repay the underpaid income tax to the Tax and Customs Board in the next calendar year on the basis of the income tax return. The Health Insurance Fund cannot check the correct calculation of the tax-free income, as the Health Insurance Fund has no information on how much tax-free income a person actually can use.

The Health Insurance Fund will tax all sickness and care allowances payable from 15 May 2024 at the income tax rate of 20% in 2024.

If the application for tax-free income has been submitted to the Health Insurance Fund before 15 May 2024, but the payment of sickness or care benefit will be made on or after 15 May 2024, the Health Insurance Fund will not consider the application for tax-free income.

Income tax overpaid during the calendar year will be refunded in the following calendar year on the basis of an income tax return submitted to the Tax and Customs Board.