Government warns against proposed NHI premium exemptions for seniors

Taipei, Dec. 30 (CNA) The Ministry of Health and Welfare on Monday warned that the opposition Kuomintang's (KMT) plans to exempt some seniors from paying premiums into the National Health Insurance (NHI) system could bleed the program of its key reserves by 2026.

The health ministry issued the warning over proposed amendments to the Senior Citizens Welfare Act, which are scheduled to come up before the Legislative Yuan on Tuesday.

Under the KMT's original proposal, people aged 65 and above who have individual income tax rates under 20 percent would be exempt from paying NHI premiums.

The party subsequently scaled back the proposal to only exempt seniors with a 5 percent income tax rate.

In Taiwan, people who make up to NT$590,000 (US$17,997) per year pay a 5 percent income tax rate, while the 20 percent tax rate is applied to people with an annual income above NT$1,330,001.

At a press conference Monday, Deputy Health Minister Lin Ching-yi (林靜儀) warned that a premium exemption for seniors with income tax rates under 20 percent would cut NT$54 billion in revenue from the NHI system per year.

An exemption for those with a 5 percent income tax rate would cause NHI revenues to drop by NT$24.1 billion, Lin said.

Regardless of which form of means tested is adopted, both proposals would leave the NHI safety reserve with less than one month worth of expenditures by 2026, putting the system in peril, Lin said.

"Tax-exempt seniors are not necessarily poor," Lin said, noting that for seniors drawing monthly pensions, the first NT$814,000 is not counted as income for tax purposes, while another NT$92,000 is tax exempt.

"This group of seniors has an annual income that far exceeds that of many young families or single people," and could lead to conflicts stemming from a feeling of "generational exploitation," Lin said.

The shortfall caused by the less costly proposal represents just 3 percent of the NT$875.53 billion in total NHI expenditures budgeted for 2024.

However, given the annual deficits run by the system that forced Taiwan to increase the premium rate to 5.17 percent of base pay from 4.69 percent previously in 2021, any loss of revenue could further hurt the system and force another premium increase.

Beyond the financial consequences, Health Minister Chiu Tai-yuan (邱泰源) said at a press briefing earlier Thursday that the proposal could also affect important existing programs.

He urged the Legislature not to make any changes without careful consideration because such changes could hurt those programs, many of which are aimed at offering services to disadvantaged groups, geographically remote areas, and those suffering from rare diseases.