Exemption on health insurance premiums: limits per beneficiary

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the application of exemption limits in Personal Income Tax (IRPF) when a company pays the premiums for health insurance for its employees and their family members.

What the DGT has ruled

The inquiry focused on determining whether the exemption limit provided in Law 35/2006 could be applied jointly for the worker and their spouse with a disability. The body has ruled that exemption limits apply individually to each beneficiary.

According to the established criteria, health insurance premiums paid by the company are not taxed as benefits in kind as long as they do not exceed the following annual amounts per person:

• 500 euros for the general beneficiary.
• 1,500 euros if the beneficiary has a disability.

Any excess over these specific limits, calculated independently for each beneficiary, must be considered employment income in kind and, therefore, will be taxed in the employee's IRPF.

What this means for you

For the employee, this implies that the exemption is not a common pool for the entire family unit, but rather that each member has their own quota. If the company covers insurance for a worker and their spouse with a disability, both can enjoy their respective exemption limits (500 euros for one and 1,500 euros for the other) without the amount for one affecting the limit of the other.

For the company, the relevance lies in payroll management. As the policyholder, the company must identify the excess premium relative to the individual limits of each beneficiary to correctly value it as a benefit in kind.

What should be done

It is necessary to verify the structure of collective health insurance policies and how premiums are broken down per beneficiary. Correctly identifying the disability status of each beneficiary is fundamental to applying the 1,500 euro limit where appropriate. It is recommended to assess each particular situation to ensure that the valuation of benefits in kind is accurate and complies with current regulations.