Dáil Éireann - Volume 333 - 24 March, 1982

Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1982: Motion.

Minister for Health (Dr. Woods): I move:

That Dáil Éireann approves the following regulations in draft—

Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1982,

a copy of which regulations in draft was laid before the House on 18th March, 1982.

Subsection 3 of section 9 of the Health Contributions Act, 1979, provides that the Minister for Health may by regulations vary the income ceiling level which, taken in conjunction with the rate of health contributions applicable, determines the maximum amounts of contributions payable in respect of an individual in any particular contribution year. Subsection 5 of section 9 of the Act of 1979 requires that a draft of the proposed regulations shall be laid before each House of the Oireachtas and that the regulations shall not be made until a resolution approving of the draft regulations has been passed by each House. The draft regulations now before the House deal with the income ceiling which, it is proposed, shall apply in relation to the contribution year commencing on 6 April 1982.

The original ceiling level specified in the Health Contributions Act, 1979, was £5,000. This was varied to £5,500 before income-related health contributions came into operation on 6 April 1979. The latter sum was varied to £7,000 under regulations approved by both Houses of the Oireachtas in March 1980 and applied to the contribution year commencing 6 April 1980. This ceiling was increased again in 1981 to £8,500 with effect from 6 April 1981.

[277] The proposed new ceiling figure is £9,500. This will apply to the contribution year commencing 6 April 1982. This ceiling of £9,500 is the same as that specified in the Social Welfare Bill, 1982, which we have already discussed.

The income limit for free hospital consultant services will also be raised to £9,500. This new limit will come into operation from 1 June 1982 and will relate to income for the year ending 5 April 1982. The reason for the later date arises from the necessity of producing evidence of income when claiming entitlement. The usual evidence required in the case of employed persons is the form P.60 issued by employers. This may not be issued until some weeks after 5 April. However, the later date is to the general advantage of applicants as their eligibility during the months of April and May 1982 will depend on their income for the year ended 5 April 1981. All persons are now entitled to free hospital inpatient services in a public ward and to free out-patient services. Those who had incomes of £9,500 or more in the year ending 5 April 1982 will be liable to pay the consultant's fees.

For the purposes of collection of health contributions, income is divided into three streams:

Income which is liable for income tax under the PAYE system and which is derived from Insurable Employment;

Income which is liable for Income Tax under the PAYE system but which is not derived from insurable employment;

Income which does not fall within the previous categories such as income from farming, the income of self-employed persons and investment income.

The collection of health contributions from employees is integrated with the administrative machinery for the collection of pay-related social insurance contributions and redundancy contributions through the PAYE tax system.

[278] It is necessary that the ceiling levels for social insurance, redundancy and health contributions should be identical: otherwise the operation of the collection system would be more costly and far more cumbersome. In particular, the co-ordinated arrangements facilitate employers in the administrative processes involved at their end.

The collection of health contributions from individuals with income which is liable for income tax but which is not derived from insurable employment is arranged through the tax collection system. The collection of health contributions in respect of income derived from farming is administered by health boards. Taking into account the situation as regards farming income, the multiplier which is used by health boards in the notional assessment of income for health contributions purposes will remain unaltered for the contribution year 1982-83 at 117.

It is estimated that raising the ceiling level from £8,500 to £9,500 should result in an increase in the amount of contributions to be collected of approximately £2 million in the contribution year 1982-83. Of the estimated additional income about £200,000 should arise in the calendar year 1982. The remainder of the additional yield should be paid over in the first quarter of 1983. This position arises simply because most contributors with incomes under £9,500 will not have paid over their maximum contribution by the end of 1982. These represent by far the greatest proportion of income earners.

As I have already mentioned, the purpose of the draft regulations is to fix the upper limit of income in relation to which the amount of the health contributions payable in respect of any one individual in the contribution year commencing 6 April 1982 will be determined. I now ask the House to approve of the Health Contributions (Yearly Reckonable Income) (Variation) Regulations, 1982 in draft.

Miss Flaherty: Fine Gael are broadly in agreement with the setting of the figure which was the figure agreed as part of the January budget. The income limit will [279] operate from 1 April. The Minister said the benefits will come into operation as from June. Will he clarify the reason for the delay?

Mr. Noonan (Limerick East): In his speech the Minister said that the evidence of income will be the form P.60. He stated that this will be to the advantage of the person paying the contribution because eligibility will extend for April and May on the previous year's income. I should like to know what the Minister will use after that. In the situation of a person with an income in excess of £9,500 in 1982 after the tax year commences, will he be assessed on income for the whole year on the basis of the form P.60? A sentence in the Minister's speech suggests that it will apply only for April and May and that subsequently some other form of assessment will apply. I should like the Minister to clarify that.

The Minister referred to notional assessment for farmers and he stated that the multiplier used by health boards in the notional assessment of income will remain unaltered at 117 for the contribution year 1982-83. In the present state of farming 117 is a very high multiplier. It should be revised downwards to keep the real level of income and eligibility in line with what it was originally.

Mr. Fitzpatrick (Cavan-Monaghan): As the Minister has told us, the objective of these regulations is to increase the ceiling for payment of health contributions from £8,500 to £9,500. The Minister states that the effect of this will bring in £2 million in the year 1982-83. The Minister has told us that a comparatively small amount of that money, £200,000, would be brought in in the calendar year of 1982 with the remainder being brought in in the first quarter of 1983. The Minister has also told the House that as well as increasing the ceiling for payment of contributions the income limit will also be raised from £8,500 to £9,500. I should like the Minister to tell the House the number of people who will be eligible for benefit as a result of increasing the eligibility limit. He should also tell the House [280] the cost to the Exchequer of increasing that limit.

I presume that the extra £2 million that will be collected will be sufficient to cover the cost of extending the benefits to the additional people. If that is not so I should like to know what provision the Minister has made for discharging the additional cost to the health boards and the Exchequer. I should like to know the number of people who do not have medical cards and whose income is under £8,500.

Dr. O'Hanlon: I should like to ask the Minister to look at the system of collection from the farming community administered by health boards. It appears to be cumbersome in that a number of small farmers who are medical card holders receive demands which must cost a lot of money administratively to issue. The receipt of such demands poses problems for those farmers. Will the Minister investigate the possibility of transferring that function to rent collectors who are in a better position to know owners of small holdings? It appears that the lists operated by health boards are not up to date.

Minister for Health (Dr. Woods): I should like to thank Deputies for their contributions. In relation to a question raised by Deputy Flaherty I should like to state that the problem relates to having a P.60 form available. That form very often is not available until the middle or the end of May. It varies from year to year and person to person and it was for that reason that 1 June was considered a convenient time. That date has been found to be satisfactory. Administratively it fits in well. If an earlier date was chosen we could run into administrative difficulties. I should like to tell Deputy Noonan that eligibility and the payment of contributions are two separate things. That is part of the confusion in the system. Contributions are on current income and eligibility is based on the previous year's income as certified by tax returns or, in other cases, by the use of the multiplier. That is the reason why such a small proportion of the new [281] increase comes into this year, a matter that was referred to by Deputy Fitzpatrick. Most people will only exceed the £8,500 limit towards the end of the year or the beginning of next year.

Mr. Noonan (Limerick East): I should like the Minister to clarify that matter further. With the pacing of wage agreements a person on £9,500 after the beginning of the tax year in 1982 may be carried 10 per cent over that figure and I should like to know if such a person will be paying on £9,500 or on the figure in excess of £10,000?

Dr. Woods: The figure of £9,500 is the upper limit and people only pay until they reach that figure. The Deputy may recall that there was a proposal earlier in the year — not from this side of the House but from the previous Government in documents circulated — to include all income under the 1 per cent levy. That was dropped and was not included in the first budget and is not included now. We are talking about going to £9,500 and stopping there.

Mr. Noonan (Limerick East): If a person reaches £10,500 earlier in the year is he still eligible on the previous year's P.60?

Dr. Woods: Yes, eligibility is based on the previous year's P.60.

Deputy Noonan also raised a point about the notional assessment in relation to the farming community. He made a fair point that in the past year farming was bad and although it improved somewhat this year it was still in difficult circumstances. I am aware of that and in the last year when I was involved in this I decided not to increase it. For the second year in succession it has not been increased. I am sure the Deputy will accept that that is a reasonable approach on the part of the Government. With regard to the question raised by Deputy O'Hanlon on the method of collection from the farmers I should like to state that collection has been difficult in [282] relation to farming as it is in relation to many other sections of the community. As far as the Department is concerned the collection system operated is satisfactory. It is a new system and the farming community accept this as a contribution they make towards these services. They are happy to work with that. I will have the statement in relation to demands going out in error investigated. We will look at the administrative side in relation to the collection system.

Mr. Fitzpatrick (Cavan-Monaghan): The Minister did not answer my query as to the number of additional people who will be brought in and how much extra this will cost the Exchequer.

Dr. Woods: It would be difficult to answer that now because this only changes entitlement to consultant services. Everybody is entitled to a bed in a public ward free but entitlement to consultant services changes. All that is happening is that we are keeping more or less up with inflation. The numbers should be more or less similar. If we did not make this change, people would lose eligibility.

On the more complex aspect of exact costings throughout the system that information is not readily available. So far as the health boards are concerned, I shall be meeting these in the near future about their problems. They have very substantial problems, as the Deputy is probably aware. These have been fairly well publicised.

Mr. Fitzpatrick (Cavan-Monaghan): Is the Minister saying that he is satisfied that the increase from £8,500 to £9,500 will not increase the numbers entitled to free consultant services, to the drug allowance and so on?

Dr. Woods: My understanding is that it will not increase the numbers. They will be more or less the same.

Miss Flaherty: Would it be possible to get figures of the estimated numbers and [283] cost involved, both in terms of income and cost of benefit?

Dr. Woods: It would be extremely difficult because the Deputy is talking about people who might apply for consultant services in the coming year, based on their last year's incomes. That is not something which is readily quantifiable, although one could get it historically, perhaps. Basically, it is estimated that there would be no increase in numbers. All we are doing is keeping up with inflation, keeping the same number of people in the system.

Miss Flaherty: Would this be comparable with the increase in the last two years, that going on those figures the Minister could establish that the situation would possibly be the same? Is that what the Minister is working on?

Dr. Woods: Yes. That would be the normal situation. The figure of £9,500 was calculated under the previous Government. It is carried through because it is tied in also with the social welfare payments and the figure of £9,500 there. There could be minor variations, depending on how the inflation rate goes. Basically, at present we do not expect any increase in the numbers involved.

Mr. Noonan (Limerick East): I have one last question. In the case of contributions from the farming community who are eligible, as the Minister is probably well aware, sometimes they do not pay their contributions. At what stage does eligibility cease if the payments are not made? Is there a general practice? As I understand, it varies from health board to health board.

Dr. Woods: That is a separate question. This is because the eligibility and the contributions are two separate things. One is eligible by definition of one's position. Whether one pays or not is a separate matter for the health boards to take up. One's eligibility would be covered by one's notional assessment.

[284] Mr. Noonan (Limerick East): So farmers who do not pay will remain eligible?

Dr. Woods: It is a matter for the health board if there are problems in that area. The Deputy will appreciate that this has been a problem, particularly in the past. I was indicating that the system was operating fairly satisfactorily. In deference to the difficulties of the farming community last year and this year, the multiplier has not been increased. As far as the health boards are concerned, the situation has been relatively satisfactory.

Motion agreed to.