How to calculate VHIS tax deduction? (With 4 examples)
Under the government tax system, taxpayers can purchase tax system , and claim tax deductions for the premiums. Does insuring family members save more tax? Bowtie will use the “Mr. Wong’s family 👨🏼🦲” as a blueprint, with 4 hypothetical cases, to teach you how to save tax to the fullest!
Family Case Study
Family Case Study
Assume Mr. Wong’s family 👨🏼🦲👩🏽 consists of eight members, with their premiums as follows:
- Mr. Wong and his wife 👨🏼🦲👩🏽 are employed, both 40 years old
- Mr. Wong 👨🏼🦲 has the highest income, reaching the top tax rate of 17%
- By having him apply for tax deductions on all voluntary health insurance, you can deduct the maximum amount!
- Both of their parents are retired, all four are 60 years old
- Both of their children are about to graduate, both 20 years old
Case One: Mr. Wong Only Insures Himself 👨🏼🦲
Since Mr. Wong is employed and covered by group medical insurance , he purchases high-end voluntary health insurance ($80,000 deductible) . By combining it with his company insurance, he reduces expenses while gaining greater coverage. After calculation, the tax deduction amount is $581.
Insured: Mr. Wong 👨🏼🦲
| Insured Person | Premium | x Tax Rate | = Tax Deduction Amount |
| Mr. Wong 👨🏼🦲 | $3,420* | x 17% | = $581 |
- *Based on the standard premium for a 40-year-old man insuring with Bowtie Pink (Ward) voluntary health insurance with an $80,000 deductible.
❓ Don’t understand how to use voluntary health insurance to top up company insurance for maximum coverage? Read this article to learn more!
Case Two: Mr. Wong and His Wife’s Insurance 👫
Mrs. Wong 👩🏽 is also employed and covered by Company Medical Insurance , so Mr. Wong 👨🏼🦲 purchased the same plan for her: High-end Voluntary Health Insurance ($50,000 Deductible) . When both are insured, the tax deduction amount is double that of Mr. Wong alone, exceeding $1,500.
Insured: Mr. Wong 👨🏼🦲
| Insured | Premium | x Tax Rate | = Tax Deduction |
| Mr. Wong 👨🏼🦲 | $4,632^ | x 17% | = $787 |
| Mrs. Wong 👩🏽 | $4,632^ | x 17% | = $787 |
| Total | $9,264 | $1,574 |
%%acf_remarks legend=^%%
^ Calculated based on the standard premium for a 40-year-old man/woman subscribing to Bowtie Pink Voluntary Health Insurance (Ward) with an $80,000 deductible.
%%end%%
Case Three: Mr. Wong, His Wife, and Children Four People Insured 👨👩👧👧
Since Mr. Wong’s 👨🏼🦲 children are about to graduate, he expects they will also be covered by company medical insurance, so he purchased the same High-end Voluntary Health Insurance ($80,000 Deductible) plan for them.
After calculation, the tax deduction amount is 1.6 times higher than for two people, reaching $2,600.
Insured: Mr. Wong 👨🏼🦲
| Insured | Premium | x Tax Rate | = Tax Deduction |
| Mr. Wong 👨🏼🦲 | $4,632 ^ | x 17% | = $787 |
| Mrs. Wong 👩🏽 | $4,632 ^ | x 17% | = $787 |
| Son 👦🏽 | $3,036 # | x 17% | = $516 |
| Daughter 👧🏽 | $3,036 # | x 17% | = $516 |
| Total | $15,336 | $2,606 |
- ^Calculated based on the standard premium for a 40-year-old man/woman insuring Bowtie Pink (Ward) with an $80,000 deductible.
- #Calculated based on the standard premium for a 20-year-old man/woman insuring Bowtie Pink (Ward) with an $80,000 deductible.
Case Four: Mr. Wong Insures His Family of Eight 🏘️
If you’re savvy, you might already know that when Mr. Wong insures his family of eight 🏘️, the tax deduction amount will be even more. This confirms that insuring couples, and even helping parents and family members, can deduct more tax!
Without further ado, find out how much the tax deduction amount is when Mr. Wong insures his family of eight 🏘️. Since the four elderly members have retired and lack company medical insurance to cover the tens of thousands in deductibles, Mr. Wong insures each of them with a Bowtie VHIS Standard , which offers reasonable premiums and sufficient coverage (annual limit up to $100,000).
After calculation, the tax deduction amount is 2.56 times higher than insuring four people, reaching $6,664.
Insured: Mr. Wong 👨🏼🦲
| Insured | Premium | x Tax Rate | = Tax Deduction |
| Mr. Wong 👨🏼🦲 | $5,256 1 | x 17% | = $893 |
| Mrs. Wong 👩🏽 | $5,256 1 | x 17% | = $893 |
| Son 👦🏽 | $3,432 2 | x 17% | = $583 |
| Daughter 👧🏽 | $3,432 2 | x 17% | = $583 |
| Mr. Wong’s Father 🧓🏼 | $5,568 3 | x 17% | = $946 |
| Mr. Wong’s Mother 👩🏼🦳 | $5,352 3 | x 17% | = $910 |
| Mrs. Wong’s Father 👴🏼 | $5,568 3 | x 17% | = $946 |
| Mrs. Wong’s Mother 👵🏼 | $5,352 3 | x 17% | = $910 |
| Total | $39,216 | $6,664 |
- 1Based on the standard premium for a 40-year-old man/woman purchasing Bowtie Pink (Ward) Voluntary Health Insurance with an $80,000 deductible.
- 2Based on the standard premium for a 20-year-old man/woman purchasing Bowtie Pink (Ward) Voluntary Health Insurance with an $80,000 deductible.
- 3Based on the standard premium for a 60-year-old man/woman purchasing Bowtie Voluntary Health Insurance Standard Plan.
Myth: Buying an Expensive Plan for More Tax Deductions Saves the Most Money?
However, many people think that buying a more expensive Voluntary Health Insurance for themselves or their family can deduct more tax and save more money. Indeed, the more expensive the Voluntary Health Insurance, the more tax you can deduct.
But the most money-saving way is: Buy an affordable Voluntary Health Insurance with sufficient coverage!
Let’s use the example of Mr. Wong’s family of eight 🏘️ to calculate different money-saving schemes.
- Money-saving Scheme A: Everyone buys an expensive Voluntary Health Insurance up to the $8,000 premium limit to deduct more tax!
- Money-saving Scheme B (i.e., Case 4): Everyone buys a reasonably priced Voluntary Health Insurance with sufficient coverage, then apply for tax deduction!
| Mr. Wong’s family of eight 🏘️ | Money-saving Scheme A | Money-saving Scheme B (i.e., Case 4) |
| Annual actual premium paid | $64,000* | $ 39,216 |
| Eligible premium for tax deduction | $64,000* | $ 39,216 |
| Tax deduction amount
(assuming a tax rate of 17%*) |
$64,000 x 17%
= $10,880 |
$39,216 x 17%
= $6,664 |
| Annual final expenditure
(actual premium paid – tax deduction amount) |
$64,000 – $10,880
= $53,120 |
$39,216 – $6,664
= $32,552 |
| *For simple calculation, assume each person’s annual premium is $8,000. | ||
From the “Annual final expenditure” , it’s clear that Money-saving Scheme B (i.e., Case 4) saves over 60% compared to Money-saving Scheme A!
Buying an affordable Voluntary Health Insurance with sufficient coverage and then applying for tax deduction is the “most money-saving scheme”!
- #For simple calculation, assume each person's annual premium is $8,000.
From the ‘Annual Final Expenditure’, it can be seen that the money-saving plan B (i.e., Case 4) saves more than twice as much as the money-saving plan A!
Buying a cheap but sufficiently covered voluntary health insurance and then applying for tax deduction is the ‘most money-saving plan’!
- *For the convenience of readers, all numbers have been rounded to the nearest integer after calculation
- *Any content related to Bowtie products in this article is for reference and educational purposes only; customers should refer to the detailed terms and conditions on the relevant product pages.
Where to Find High Value-for-Money Voluntary Health Insurance? Bowtie Has It!
More Tax Filing Strategies :
- Fiscal Budget Information: Budget Lazy Guide ｜ Tax Refund Arrangements
- Tax Filing Information: Tax Filing ｜ Online Tax Filing ｜ Tax Calculator ｜ First-Time Tax Filing Tutorial ｜ Self-Employed / Freelance Tax Filing ｜ Departure Tax Clearance
- Tax Payment Information: When to Pay Taxes ｜ Late Tax Payment ｜ Personal Income Tax
- Tax Exemption Strategies: Personal Tax Exemption Calculation ｜ Child Tax Exemption ｜ Parent Tax Exemption ｜ Salaries Tax
- Tax Deduction Strategies: Tax Deduction Trio ｜ Mortgage Tax Deduction ｜ Tax-Deductible Annuity ｜ Deferred Annuity
- Voluntary Health Insurance Tax Deduction: Voluntary Health Insurance Tax Deduction Strategies ｜ Voluntary Health Insurance Tax Deduction Examples ｜ Voluntary Health Insurance Tax Deduction Application ｜ Helping Parents Buy Voluntary Health Insurance
- Company Tax Filing: Company Tax Filing
