TAIPEI: The Ministry of Health and Welfare issued a cautionary statement on Monday concerning the opposition Kuomintang's (KMT) proposal to exempt certain seniors from contributing premiums to the National Health Insurance (NHI) program. The ministry warned that such measures could deplete the program's crucial reserves by 2026.
According to Focus Taiwan, the health ministry's warning targets proposed amendments to the Senior Citizens Welfare Act, which are set to be discussed in the Legislative Yuan on Tuesday. Initially, the KMT proposed that individuals aged 65 and above with individual income tax rates below 20 percent be exempt from NHI premium payments. Later, the proposal was revised to include only those seniors with a 5 percent income tax rate.
In Taiwan, taxpayers earning up to NT$590,000 (US$17,997) annually fall under the 5 percent tax bracket, while those earning more than NT$1,330,001 are subject to a 20 percent rate. During a press conference on Monday, Deputy Health Minister Lin Ching-yi highlighted that exempting seniors with income tax rates under 20 percent could result in a NT$54 billion annual revenue loss for the NHI. A more limited exemption for seniors with a 5 percent tax rate would reduce NHI revenues by NT$24.1 billion.
Lin further stressed that either proposal would leave the NHI safety reserve with less than one month's worth of expenditures by 2026, jeopardizing the system's financial stability. Lin pointed out that "tax-exempt seniors are not necessarily poor," as initial monthly pensions up to NT$814,000 and an additional NT$92,000 are not considered taxable income. This could create a disparity between seniors and younger families or single individuals, potentially leading to societal tensions.
Even the less financially burdensome proposal would account for just 3 percent of the NT$875.53 billion total NHI expenditures projected for 2024. However, given the system's ongoing annual deficits, which prompted a premium rate increase from 4.69 percent to 5.17 percent in 2021, any loss of revenue could exacerbate the situation and necessitate further premium hikes.
Health Minister Chiu Tai-yuan emphasized at a Thursday press briefing that the proposal could impact existing programs critical to disadvantaged groups, remote areas, and individuals with rare diseases. He urged legislators to carefully consider the potential consequences before making any modifications.