Per RMC 50-2018, the premium on Health Card paid by the employer for all employees, whether rank-and-file or managerial/supervisory, under a group insurance shall be included as part of other benefits of these employees which are subject to the PhP90,000.00 threshold.

The new ceiling of 13th month pay and other benefits of P90,000.00 offers a wide range of opportunity to augment the income of employees without tax implications.

Legal Basis of this benefit is RA 10963. Under Section 9 of the law, the gross benefits received by officials and employees of public and private entities are excluded from gross income: Provided, however, That the total exclusion shall not exceed P90,000 which shall cover benefits received by employees pursuant to PD 851, as amended by Memorandum Order No. 28. (See also RR 8-2018 and RR 11-2018)

Upcoming Title: Tax Solutions on Employee Compensation and Benefits (TRAIN Law) Second Edition

Considering that the treatment is to form part of the “other benefits” then this may be taxable on the part of the employees. If the premium for the year is P10,000.00 then this means that this will be taxable on the part of the employees if it exceeds the P90,000.00 ceiling.

If the employee’s annual basic pay is P250,000.00 he will be taxable if he is given a health card with annual premium of P10,000.00 to the extent of the amount of such premium.

However, individual premiums (not part of group insurance) paid for selected employees holding managerial or supervisory functions are considered “fringe benefits” subject to fringe benefits tax. This will be taxable at the rate of 35% based on TRAIN Law.

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