PhilHealth contributions not taxable – PHIC

By Thelma C. Bicarme

TUGUEGARAO CITY – An official of the Philippine Health Insurance (Philhealth) here clarified that no taxes will be imposed on the premium contributions of members of the state-run insurance corporation.

Sam Murillo of Philhealth 2 said that their president and CEO Dr. Eduardo Banzon made the clarification in view of a recent issuance from the Bureau of Internal Revenue (BIR) imposing taxes on voluntary contributions to social security agencies including Philhealth, in excess to what the law allows.

Quoting the CEO, Murillo said the employed members’ contributions are based on a salary schedule and the latest range of contribution rates that Philhealth prescribed took effect in January 1, 2007 and until now, the said contribution schedule is being followed.

Murillo also said individually-paying members (IPMs), whose average monthly income over the last 12 months is P25,000 and below, meanwhile, pay P300 per quarter while those earning above P25,000 pay P600 per quarter. This two-tiered premium rate for IPMs took effect October last year.

Revenue Memorandum Circular 27-2011 states that voluntary contributions in excess of what the law allows are not excludible from the gross income of the taxpayer and hence, not exempt from Income Tax and Withholding Tax. Consequently, the exemption from Withholding Tax on compensation referred to in Section 2.78.1 (B)(12) of Revenue Regulations No. 2-98 shall apply to mandatory/compulsory GSIS, SSS, Medicare and Pag-ibig contributions.

Murillo clarified that Philhealth does not collect premium contributions over and above the premium ceilings in anticipation for the entitlement of higher benefits, as they do not have a mechanism for it. (Reprinted from One-Luzon e-Magazine)