Net annual cost of VHIS cover after the salaries tax deduction.
Net annual cost
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Total premium
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Total deductible
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Tax saving
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Your breakdown
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What VHIS really costs once tax is back in your pocket
The Voluntary Health Insurance Scheme is a government-certified standard for private medical cover, and one of its selling points is a salaries tax deduction. The premium you pay for a certified plan reduces the income on which your tax is charged, so the sticker price is not the price you actually bear. This tool answers the question that matters when you are weighing whether to buy or upgrade a plan: after the tax saving, what is the net annual cost? It compares the gross premium you hand over with the tax you claw back and shows the difference.
The deduction is per insured person, and you can claim for relatives you pay premiums for, such as a spouse, children or parents, not just yourself. The cap modelled here is $8,000 of premium per insured person each year. Premiums beyond that per-person ceiling still buy you cover, but they no longer reduce your tax. Treat the cap and the rates as the figures the calculator applies, set by the Budget, and confirm them with the Inland Revenue Department.
Two moving parts: the per-person cap and your marginal rate
The saving is built from two things. First, only the deductible slice counts, which is the lower of the premium per person and the $8,000 cap, multiplied by the number of insured people. Second, that deductible amount is worth your marginal rate, the top band your income reaches. A taxpayer at the top progressive band recovers far more than one in the lowest band on the identical premium. That is why a plan that looks expensive can be quite affordable once the deduction lands, and why the value of buying VHIS rises with your income.
Two family members, $10,000 each
Run the default: two insured people, a premium of $10,000 each, and a marginal rate at the top 17 percent band. You pay $20,000 in total premiums. But the deductible amount is capped at $8,000 per person, so only $16,000 is deductible, not the full $20,000. The tax saving is $16,000 multiplied by 17 percent, which is $2,720. Subtract that from the $20,000 you paid and the net annual cost of the cover is $17,280. The $2,000 of premium above the caps, $1,000 per person, simply does not attract relief.
A subtlety the tool handles correctly
Notice that the calculator separates gross outlay from the capped deductible. Your real cost is the full premium minus the saving, but the saving is only ever computed on the capped portion. People sometimes assume the whole premium is deductible and overestimate the relief, then are surprised at filing time. The honest figure is the one shown here. A practical tip: if you are choosing between a $10,000 plan and a leaner $8,000 plan for the same person, the extra $2,000 of premium on the dearer plan delivers no tax saving at all, so judge it purely on the better cover it buys. One more point on the wider system: a medical insurance payout you receive is not income that Hong Kong taxes, and the scheme sits alongside the territory's broader position of no tax on investment gains, which is why the deduction is the main tax lever here.
Can I claim VHIS premiums I pay for my parents?
Yes. The deduction covers premiums you pay for specified relatives, including your parents, spouse and children, with the $8,000 per insured person cap applying to each of them. Add each person you genuinely pay for into the insured-persons count, and confirm the eligible relative categories with the IRD.
Is the deduction separate from the MPF and annuity reliefs?
Yes. The VHIS deduction has its own per-person cap and does not eat into the mandatory MPF deduction or the combined annuity and voluntary contribution cap. You can claim VHIS on top of those other reliefs, each under its own limit.