Good news for employees! Starting from January 1st of next year, Latvia will significantly increase the tax-free amount limit health insurance for policies from the current 426.86 euros to 750 euros. These changes mean that employers who own employees purchases of health insurance policies within this limit will not incur payroll taxes. With it health insurance policies will become much more affordable and useful.
What was the tax-free limit until now?
From 2006, the limit of tax benefits in the amount of 426 euros applies to health insurance policies. However since then the cost of health care services has increased, especially in recent years. Consequently, the policies that employers could afford within this limit became increasingly inadequate, offering limited coverage and narrow copays range of services.
Fortunately, this will change from next year, as the tax-free limit will be raised by less than 57% who is a significant benefit for all employees whose employer until now and also starting next year will provide health insurance.
The low and restrictive tax relief limit previously reduced the opportunities for employers to offer annually comprehensive and affordable policies. When purchasing policies above the tax relief limit, employers It was to pay additional tax amounts.
The amendments to the Personal Income Tax Law approved in the 2024 state budget package provide for the following question to be solved by setting the non-taxable limit of 750 euros.
What is health insurance?
Health insurance is a type of insurance coverage that usually pays the insured persons medical and surgical expenses, such as doctor and specialist consultations, laboratory, diagnostic and ultrasonographic examinations, as well as physical procedures, patient contributions, co-payments and a number of others services of medical institutions. Depending on the type of health insurance coverage, either the insured person covers costs from their own out-of-pocket and then get reimbursed, or the insurer pays directly to the provider, meaning the patient doesn't have to pay anything to the doctor.
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