Where does the tax-advantaged health insurance "benefit" lie?

Questioning AI · Will including long-term care insurance in tax-advantaged health insurance respond to aging needs?

“What is tax-advantaged health insurance? What types are there?”

——Netizen “Liang’s Path to Growth”

As the comprehensive individual income tax settlement and filing for 2025 proceeds in an orderly manner, tax-advantaged health insurance has once again become a hot topic among the public due to its benefit of pre-tax deductions. Recently, some netizens left messages seeking to understand tax-advantaged health insurance.

Tax-advantaged health insurance is officially called “Personal Tax-Preferential Commercial Health Insurance.” According to the “Notice on Matters Concerning the Application of Personal Income Tax Preferential Policies for Commercial Health Insurance Products” (hereinafter referred to as the “Notice”) issued by the State Administration of Financial Supervision in 2023, tax-advantaged health insurance is a personal insurance product developed by life insurance companies in accordance with national product guidelines, approved or filed by financial regulatory authorities, and eligible for personal income tax benefits.

In simple terms, tax-advantaged health insurance is not traditional commercial health insurance; it can be understood as an inclusive insurance product supported by national policies combined with commercial insurance operations. Compared to the medical insurance and critical illness insurance commonly purchased by consumers, tax-advantaged health insurance emphasizes policy attributes and is an important measure for the country to improve a multi-layered medical security system and reduce the medical burden on the public.

From the pilot launch in 2015, to nationwide promotion in 2017, and the implementation of the “Notice” in 2023, tax-advantaged health insurance has continuously optimized, with the most obvious change being an expanded scope of coverage. After the implementation of the “Notice,” on top of existing medical insurance, new coverage for long-term care insurance and disease insurance has been added, precisely matching the differentiated protection needs of different groups.

For families with elderly members or those under caregiving pressure, long-term care insurance can provide professional nursing services or expense subsidies; for those concerned about major illness risks, disease insurance can pay a lump sum upon diagnosis of specified serious illnesses, alleviating financial pressure on patients; medical insurance continues to play a supplementary role, covering costs beyond basic medical insurance reimbursements, with some products also covering reasonable expenses outside the medical insurance catalog, ensuring that people with different needs can find suitable protection plans.

As the name suggests, one of the core advantages of tax-advantaged health insurance is the ability to enjoy tax benefits. As long as consumers purchase policies that meet policy requirements, they can deduct up to 2,400 yuan annually from their taxable income. This roughly translates to about 200 yuan of pre-tax deduction per month. It is important to note that this deduction is additional and does not conflict with benefits like education for children or elderly care, nor does it reduce the monthly personal income tax threshold. It is essentially an extra benefit provided by the state, allowing taxpayers to enjoy health protection while paying less in personal income tax. Besides the tax benefits, the inclusive nature of tax-advantaged health insurance is also reflected in its low entry barriers. According to the requirements of the State Administration of Financial Supervision, if an insured person purchases health insurance for themselves, the insurance company cannot refuse coverage or exclude pre-existing conditions based on prior health history. Different protection plans can be designed for people with pre-existing conditions, with fair and reasonable pricing. Additionally, the insurance period or guaranteed renewal period for medical insurance is no less than three years, and for long-term care and disease insurance, no less than five years, making coverage more stable.

Today, the variety of tax-advantaged health insurance products available to the public is increasing. There are about 30 products on the market, including medical insurance, long-term care insurance, and disease insurance. Among these, long-term care insurance accounts for more than half, well responding to the current practical needs of family elderly care. Moreover, more qualified insurance companies are participating, leading to more precise product design and more reasonable pricing. Many tax-advantaged health insurance products also include additional services such as health consultation and chronic disease management. The convenience of purchasing has also improved; besides official channels of insurance companies, policies can be bought through internet platforms and professional intermediaries, ensuring that policy benefits reach more taxpayers.

Source: Financial Times Client

Reporter: Dai Mengxi

Editor: Yang Jingyi