1About Permanent Health Insurance (PHI)

Employees and employers can contribute to permanent health insurance (PHI) to provide for an income in case they're unable to work because of sickness or accident.

There are some PHI schemes that are approved by Revenue. The taxation rules on contributions and payments differ based on whether it’s a Revenue approved scheme or an unapproved scheme.

Here’s a summary of approved and unapproved schemes:

Type	Approved	Unapproved
Employee	Contributions qualify for PAYE relief but not PRSI or USC, for contributions up to 10% of the employees earnings for PHI. PHI payments are classified as class M PRSI. The PRSI calculations pays Class M PRSI and is a separate balance	Contributions to an unapproved scheme don’t qualify for any PAYE, PRSI, or USC relief. They’re treated as voluntary deductions or post statutory deductions. PHI payments are subject to all statutory deductions of PRSI, PAYE, and USC.
Employer	The sum of employee and employer contributions more than 10% of employee’s earnings for PHI is treated as a benefit. This is added to Notional Pay subject to PRSI, PAYE and USC. All contributions made by the employer are subject to USC and will be added to the employee’s USC pay. Employer contributions less than 10% will be subject to USC pay. Any amount over the 10% will be Notional pay that’s subject to USC.	Contributions made by the employer are treated as a benefit and is part of Notional Pay that’s subject to PRSI, PAYE, and USC.

Important: Employee and employer PHI contributions will continue even during payments of PHI, unless it’s stopped the employer.