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August 21, 2017

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4 mil. deposits may be cut up to avoid NHI premium

A top banking executive has hit out at recent changes to the National Health Insurance's (NHI) supplementary premium scheme, saying that as many as 4 million term deposits may be dissolved and cut into smaller deposits by the end of the year so that depositors can avoid paying the premium.

Liu Teng-cheng, chairman of the Bankers Association of the R.O.C., made the statement at a legislative session. The Cabinet-level Department of Health (DOH) recently revised the supplementary premium scheme, which sees the National Health Insurance authorities obtain 2 percent from every NT$5,000 or more in payments from people's extra incomes. Liu was speaking about the decision to set the minimum effected rate at NT$5,000. It was previously NT$2,000. The program is to start in 2013

Liu said it is estimated that the annual interest income won't exceed NT$5,000 for any term deposit below NT$360,000.

Liu said that if based on the original minimum sum of NT$2,000, a total of 14.99 million deposits would have been effected. Now, with the increase in the minimum amount, only 8.11 million deposits will be subject to the extra payment.

From Sept. 15-21, Liu continued, 140,000 term deposits — at a total of around NT$73.1 billion — were dissolved and cut into smaller deposits. This figure is likely to rise to 4 million deposits by the end of this year, Liu estimated.

Liu added that term deposits subject to the 18-percent preferential interest rate enjoyed by military servicemen, elementary school and junior high school teachers and civil servants are not allowed to be converted into smaller deposits. Currently around 420,000 people hold such deposits.

Under the new NHI program, a supplementary premium of 2 percent will also be charged on stock dividends, in addition to such non-salary incomes as interest, professional fees, rent, and bonuses, etc., with every NT$5,000 in stock or cash dividends subject to a supplementary premium of NT$100.

Partly affected by the DOH's recent decision to include stock dividends under the supplementary premium rate scheme, the weighted share price index of the local bourse yesterday dipped 39.44 points to close at 7675.72, with turnover dropping to a two-month low of 56.29 billion.

Market insiders said that the DOH's decision may prompt stock investors to switch their stock investment funds into the mutual fund market, as investment gains from mutual funds are not subject to the supplementary premium payment.

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