The Legislative Yuan has postponed a scheduled discussion on a proposed amendment aimed at exempting low-income elderly individuals from paying National Health Insurance (NHI) premiums. The decision follows calls for further deliberations before proceeding.
The amendment, proposed by the Chinese Nationalist Party (KMT) caucus, seeks to exempt elderly individuals aged 65 and above, whose income falls below the 20 percent tax bracket, from paying NHI premiums. Under the proposal, only those whose individual income tax rate is under 20 percent would be eligible for the exemption.
However, the KMT later revised the proposal to narrow eligibility, limiting the exemption to elderly people with a 5 percent income tax rate. In Taiwan, individuals with annual incomes up to NT$590,000 (roughly US$17,998) pay a 5 percent income tax rate, while a 20 percent tax rate is applied to individuals earning over NT$1.3 million annually.
Last week, five prominent medical organizations issued a joint statement expressing concerns that the amendment could exacerbate generational inequality and strain the financial stability of the NHI system.
KMT caucus secretary-general Lin Szu-ming emphasized the need for further discussions, adding that the caucus has requested Legislative Speaker Han Kuo-yu to facilitate continued negotiations. Lin also highlighted the lack of uniformity in the thresholds for NHI premium exemptions across Taiwan’s 15 administrative regions, with varying limits currently in place.
The Ministry of Health and Welfare has raised concerns about the proposal’s potential financial impact on the NHI system. According to the ministry, exempting elderly individuals with income tax rates below 20 percent would result in a NT$54 billion annual revenue loss for the NHI program. A more limited exemption, targeting those with a 5 percent tax rate, would still cause a NT$24.1 billion shortfall. The ministry warned that either proposal would deplete the NHI’s safety reserves to less than one month’s worth of expenditures by 2026, posing a significant risk to the system’s stability.
Deputy Minister of Health and Welfare Lin Ching-yi pointed out that tax-exempt elderly individuals are not necessarily financially disadvantaged. She explained that for elderly individuals receiving monthly pensions, the first NT$814,000 of their income is not subject to taxation, and an additional NT$92,000 is tax-exempt. “This group of elderly people often have annual incomes that surpass those of many young families or single individuals,” Lin noted, suggesting that the exemption could lead to generational tensions.
Despite the KMT’s revised proposal being less costly—representing only 3 percent of the NHI’s NT$875.53 billion budgeted expenditure for last year—Lin warned that any revenue loss could worsen the system’s ongoing annual deficits. Such losses could ultimately result in the need for future premium hikes to sustain the program’s financial health.
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