Confused about PRSI and Health Contribution?

Coverage relating to PRSI refunds has been dominating the media recently and we have been receiving queries from workers asking what it’s all about and does it affect them.

The Department of Social Protection (DSP) issued a statement saying that ‘it has come to our attention that there is a chain email circulating containing incorrect information in relation to PRSI refunds’ and as a direct result of this the DSP have been processing thousands of PRSI refund claims many of which are not due a refund.

So, when are you entitled to a PRSI refund?

Up to the year 2010 the PRSI and health contribution were collected together. There are many circumstances in which the health contribution is not payable and PRSI refunds issued by the DSP usually relate to the over payment of the health contribution as opposed to PRSI. We have outlined below those who are exempt from the health contribution:

· People with income below €500 per week or €26,000 per annum;

· Medical card holders;

· Persons over the age of 70;

· People in receipt of social welfare benefits such as widows pension, deserted wife’s benefit and the one-parent family payment;

· Certain maintenance payments (under maintenance agreements);

· Deposit interest from certain special saving accounts;

· Irish dividends paid to non residents in an EU or tax treaty country are exempt;

The most common cause of an over payment of health contribution is where the levy has been applied to a person who has income under €500 per week or ultimately under €26,000 per year. If you fall into this income category, you may be entitled to a refund. The health contribution could be applied at the rate of 4% on this level of income for the year 2010 giving a maximum potential refund of up to €1,040.

Such refunds can be claimed as far back as four years and applications for 2008 must be received before 31 December 2012.

It is important to note that a refund of the health contribution will not apply from the year 2011 onwards as it has been replaced by the new Universal Social Charge.

If you are wondering  if you may be due a PRSI refund you can register here for a FREE four year PRSI assessment.