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Insurer: New VAT policy will increase costs

Fri, Feb 17th 2023, 08:48 AM
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BAHAMIAN consumers will "undoubtedly" see increased cost of services at pharmacies and other places due to the new interpretation of the VAT Act regarding remittance on medical insurance and healthcare services.

This is according to Julian Rolle, BAF Financial’s managing director and a member of the Bahamas Insurance Association.
#He spoke yesterday at a Rotary Club of West Nassau meeting.
#The changes in the treatment of VAT, imposed by the Department of Inland Revenue (DIR) and the Ministry of Finance starting on April 1, are in relation to insurers needing to remit VAT on their premiums as well as for other medical services provided such as hospitalisation, doctor’s visits, purchase of medication, therapy and other services.
#Mr Rolle said these VAT changes will require changes in the systems at the point of payment for service providers throughout The Bahamas.
#“That means when you walk into your pharmacy, they need to be charging you differently. Everybody’s got a computer system. All of these need to be changed. When that happens over at Doctors Hospital and at your physician, all of those changes will need to take place,” Mr Rolle said.
#“These changes in systems is another thing that will undoubtedly increase the cost of services. What was once a simple process of charging a copay to someone with insurance will now involve charging VAT on services, which in some cases have yet to even be determined,” he said.
#Mr Rolle stressed that previous statements made by the BIA in response to this issue are just the start of an education campaign it plans to go on in order to accurately inform its clients of the changes that will be taking place and not a bid to change the government’s mind on the issue.
#“As a part of the education campaign at the BIA, we can include numerous examples on our website to make sure that we further educate the public,” Mr Rolle said.
#“The purpose of BIA’s public statements is really not to get the government to change its mind. We don’t want them to change the new interpretation of the rules, although we believe that would be in the best interest of the public. The reason for the information that we’re sharing is simply to educate and inform our clients as to the impending changes and what the change will mean for them going forward,” Mr Rolle said.
#In a statement released last month, the Ministry of Finance accused the BIA of seeking to politicise a technical issue while missing the real concerns of the Bahamian public through this framing of the issue.
#Mr Rolle addressed this saying: “I would like to stress that the change in the interpretation is not a political issue. It is not an insurance industry issue, though the DIR sought to anchor it with us, it’s not our issue. This is an issue for the individuals receiving service under a medical insurance policy as they will now have to settle the entire VAT portion of their bill for all medical and related services.”
#Mr Rolle added: “This change in interpretation doesn’t make any more money for us. The numbers based on this new method specifically impact our clients and increase the cost of healthcare.”
#In 2020, the DIR performed an audit on a member of the BIA and determined the treatment of the VAT Act, which was being applied since inception of the law, was not consistent with the law. That change in interpretation is completely different from the interpretation and rules communicated to the insurance industry in 2014, which were followed by all the participants in the industry, Mr Rolle added.
#Last week, Mr Rolle told The Tribune Business that “no one wants to pay an additional 36 percent on their medical insurance” from April 1, when consumers will have to bear the full VAT burden on claims payments.
#Mr Rolle argued that the increased financial burden this change in VAT treatment will impose on ordinary Bahamians has yet to be properly digested or understood.

This is according to Julian Rolle, BAF Financial’s managing director and a member of the Bahamas Insurance Association.

He spoke yesterday at a Rotary Club of West Nassau meeting.

The changes in the treatment of VAT, imposed by the Department of Inland Revenue (DIR) and the Ministry of Finance starting on April 1, are in relation to insurers needing to remit VAT on their premiums as well as for other medical services provided such as hospitalisation, doctor’s visits, purchase of medication, therapy and other services.

Mr Rolle said these VAT changes will require changes in the systems at the point of payment for service providers throughout The Bahamas.

“That means when you walk into your pharmacy, they need to be charging you differently. Everybody’s got a computer system. All of these need to be changed. When that happens over at Doctors Hospital and at your physician, all of those changes will need to take place,” Mr Rolle said.

“These changes in systems is another thing that will undoubtedly increase the cost of services. What was once a simple process of charging a copay to someone with insurance will now involve charging VAT on services, which in some cases have yet to even be determined,” he said.

Mr Rolle stressed that previous statements made by the BIA in response to this issue are just the start of an education campaign it plans to go on in order to accurately inform its clients of the changes that will be taking place and not a bid to change the government’s mind on the issue.

“As a part of the education campaign at the BIA, we can include numerous examples on our website to make sure that we further educate the public,” Mr Rolle said.

“The purpose of BIA’s public statements is really not to get the government to change its mind. We don’t want them to change the new interpretation of the rules, although we believe that would be in the best interest of the public. The reason for the information that we’re sharing is simply to educate and inform our clients as to the impending changes and what the change will mean for them going forward,” Mr Rolle said.

In a statement released last month, the Ministry of Finance accused the BIA of seeking to politicise a technical issue while missing the real concerns of the Bahamian public through this framing of the issue.

Mr Rolle addressed this saying: “I would like to stress that the change in the interpretation is not a political issue. It is not an insurance industry issue, though the DIR sought to anchor it with us, it’s not our issue. This is an issue for the individuals receiving service under a medical insurance policy as they will now have to settle the entire VAT portion of their bill for all medical and related services.”

Mr Rolle added: “This change in interpretation doesn’t make any more money for us. The numbers based on this new method specifically impact our clients and increase the cost of healthcare.”

In 2020, the DIR performed an audit on a member of the BIA and determined the treatment of the VAT Act, which was being applied since inception of the law, was not consistent with the law. That change in interpretation is completely different from the interpretation and rules communicated to the insurance industry in 2014, which were followed by all the participants in the industry, Mr Rolle added.

Last week, Mr Rolle told The Tribune Business that “no one wants to pay an additional 36 percent on their medical insurance” from April 1, when consumers will have to bear the full VAT burden on claims payments.

Mr Rolle argued that the increased financial burden this change in VAT treatment will impose on ordinary Bahamians has yet to be properly digested or understood.

Click here to read more at The Tribune

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