Buying VHIS to take advantage of a special offer and tax deductions? Tips on insuring for the family
Hong Kong’s medical system is facing ever-increasing pressure. In order to provide protection both for elderly people and for children, the Voluntary Health Insurance Scheme (VHIS) recently launched by the government is undoubtedly the best choice. When you purchase a VHIS policy, you can get more tax deductions and benefits if you insure for your family members at the same time!
Formula for calculating VHIS tax savings: Insurance Premium x Tax Rate
The calculation of tax savings for VHIS is very easy. Simply multiply the insurance premium by the corresponding tax rate of the taxpayer and you will get the exact amount of tax savings.
Suppose a taxpayer purchases VHIS from Manulife (either the “Manulife Shelter VHIS Standard Plan” or “Manulife First VHIS Flexi Plan”). For a 30-year-old male, the annual premium for the standard plan is $1,832. If the tax rate of the taxpayer is 6%, the tax savings amount will be $109.9. Please note that the tax-deductible amount of the insurance premium is capped at $8,000 per insured person per year.
Buying VHIS for your family? The higher the tax rate of the insured, the larger the tax savings amount
| Table 1 : Eligible Dependant for VHIS |
| 1. Taxpayer’s spouse and children |
| 2. Taxpayer’s grandparents, parents and siblings |
| 3. Spouse’s grandparents, parents and siblings |
Another attraction of the VHIS is that a single taxpayer can insure for “eligible dependant(s)” (see Table 1) and get the dependant’s tax deduction for insurance premium in his or her personal capacity. Therefore, it is recommended that the taxpayer with the highest tax rate in the family should insure for the whole family so as to receive the highest amount of tax savings.
Take a family with six members as an example. The tax rate of the son who has just started his career is 2% after deducting all allowances, whilst the tax rate of the father is the highest at 17%. If the father insures for all family members (see Table 2), the tax saving will be greater. This is equivalent to purchasing insurance “at a discount”.
| Table 2 : Father as the policyowner to purchase health insurance for the whole family | ||
| Family Member (Age) | Annual Premium* | Tax Saving at a Tax Rate of 17% |
| Son (20) | $1,410 | $239.7 |
| Daughter (21) | $1,673 | $284.4 |
| Mother (50) | $4,613 | $784.2 |
| Father (53) | $4,358 | $740.8 |
| Grandfather (81) | $15,397** | $1,360 |
| Grandmother (78) | $13,514** | $1,360 |
| Total Tax Savings： | $4769.1 | |
| *According to the premium of “Manulife Shelter VHIS Standard Plan” **Tax-deductible amount capped at $8,000 | ||
Look for Special Offers when buying VHIS for your family
There are various VHIS products on the market. To choose the best medical care for your family and yourself, you should pay attention to whether you can find better offers whilst purchasing health insurance. At present, insurers such as Manulife, Cigna Worldwide and FTLife have launched special offer packages for purchasing VHIS for families (see Table 3).
| Table 3 : Special Offers of VHIS for Families on the Market | ||
| Insurer | Title of the Special Offer Package | The Highest Savings |
| 宏利 Manulife | Manulife “VHIS Family Discount” | 20% off premiums charged to all family members |
| 信諾環球 Cigna | Cigna VHIS Family Discount | Extra 10% off first year premium if insuring for spouse or children |
| 富通保險 FTLife | VHIS Family Premium Refund Reward | Premium refund rate based on the number of insured |
Cigna‘s special family offer is mainly applicable to spouses and children, whilst FTLife’s offer involves refunding a few months of premiums. In comparison, Manulife’s “VHIS Family Discount” is applicable to the premiums of more family members, and the highest discount could reach 20%. In other words, the whole family can “purchase VHIS at a 20% discount”, surely a more comprehensive special offer.
| Table 4：Manulife “VHIS Family Discount” | |
| Number of Family Members Insured | Premium Discount |
| 1 | 5％ |
| 2 | 10％ |
| 3 | 15％ |
| 4 or more | 20％ |
From April 1st, 2019 to July 31st, 2019, if the insured purchases a “Manulife Shelter VHIS Standard Plan” or “Manulife First VHIS Flexi Plan” for another family member, the eligible policy will be entitled to a 5% premium discount in the next policy year. If the insured purchases a VHIS plan for 2 family members, the discount is 10%. The discounts for the purchase of a VHIS plan for 3 family members and 4 or more family members are 15% and 20%, respectively (See Table 4). This is undoubtedly the most attractive special offer package, with more discounts for buying VHIS for the family, currently available in the market.
Want to learn more about the government’s VHIS? Read our VHIS Guide!
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