Many health insurers decide to reward members with money prizes for their health-conscious behaviours. Should they be taxed?
The Bundesfinanzhof recently clarified that money bonuses received by policyholders from their insurances do not necessarily have to be taxed. A general reduction in health insurance contributions deductible through bonus payments was also rejected.
The reason for this is that this would have had adverse tax consequences for the insured taxpayers. If the insured person has already paid his own expenses for precautionary measures, the bonuses paid are irrelevant for tax purposes.
Conversely, the rewards received for behaviors taken independently to improve one’s health (for example: reaching a healthy body weight, quitting smoking), represent real reimbursements in the form of prizes by the health insurance companies. The amount of the bonuses is therefore subtracted from the amount that is declared each year in the tax return under the item medical expenses.
Public health insurance companies report bonuses granted electronically to the tax authorities. If the tax office (Finanzamt) mistakenly treats the bonus as a refund of contributions, an appeal must be filed with reference to the current ruling of the Bundesfinanzhof.
The statutory health insurance companies also report the bonuses granted to the tax authorities in electronic form. If the tax office has wrongly treated the bonus as a reimbursement of contributions, an objection should be filed against the tax assessment with reference to the current ruling of the Bundesfinanzhof.