Legislature passes NHI senior subsidies

EXEMPTIONS: The revision waives NHI premiums for senior citizens whose consolidated net income in the most recent year is subject to an income tax rate of below 20 percent

The opposition-controlled Legislative Yuan yesterday passed a legal amendment requiring the central government to fully subsidize National Health Insurance (NHI) premiums for certain senior citizens.

The amendment to Article 22 of the Senior Citizens Welfare Act (老人福利法), proposed by lawmakers from the Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP), passed by a vote of 60 to 39.

Under the amendment, the central government must cover the full NHI premiums of seniors whose total consolidated income in the most recent year, as assessed by tax authorities, falls below the tax filing threshold or is subject to an income tax rate of less than 20 percent.

According to the Ministry of Finance’s progressive income tax brackets for this year, net consolidated income of NT$1.38 million (US$42,674) or less is taxed at a rate below 20 percent. This means people aged 65 or older with annual net income within that threshold would qualify for the subsidy.

The TPP caucus said the policy fulfills a campaign pledge made by its founding chairman, Ko Wen-je (柯文哲), during his 2024 presidential campaign to provide comprehensive NHI premium subsidies for people aged 65 or older.

The party added that Ko introduced subsidies for the NHI premiums of older people when he was Taipei mayor, covering residents aged 65 or older as well as indigenous residents aged 55 or older. Several other local governments later adopted similar policies, but some financially strained cities and counties with large elderly populations were unable to afford them.

However, Minister of Health and Welfare Shih Chung-liang (石崇良) expressed concern about the amendment, saying it departed from the NHI system’s principle of contributions based on ability to pay and could undermine its long-term sustainability.

“An election is temporary, but the NHI system is something people rely on and needs to be stable and sustainable,” he said.

Shih warned that breaking the principle could lead to further measures that disrupt the system’s operations.

The change could create intergenerational unfairness and lead to increases in premiums, limit growth in the overall NHI budget and exacerbate the difficulties faced by medical institutions, or require the government to allocate more tax revenue to health insurance at the expense of other welfare programs, he said.

Taiwan has become a super-aged society, with people aged 65 or older accounting for one-fifth of the population.

Shih said this group already accounts for more than 42 percent of NHI spending, while annual funding for long-term care has risen from less than NT$5 billion in 2015 to more than NT$110 billion this year.

He cautioned that the financial burden would grow as Taiwan’s population ages, saying the eventual fiscal impact could exceed initial estimates and threaten the sustainability of the health insurance system.

The TPP caucus estimated that the amendment would add nearly NT$39 billion in annual government spending, based on a monthly subsidy of NT$826 per senior.

Democratic Progressive Party (DPP) caucus secretary-general Fan Yun (范雲) said that determining who should bear the cost and where the funding should come from is a serious issue.

Bypassing committee reviews to send a bill straight to a second reading is the worst possible approach, DPP caucus chief executive Chuang Jui-hsiung (莊瑞雄) said, adding that bills involving major expenditures should clearly explain how costs would be allocated between the central and local governments, or whether the central government would cover the entire cost.

Additional reporting by Lin Hsin-han