Hello everyone, I’m having a problem with my employer and looking to see if they are telling the truth or lying. I finished teaching in June after working at this company for 2 years (small buxiban). Upon getting my final paycheck recently, I noticed it was significantly smaller than expected. When I asked about it, they said that there is a “new health insurance policy” that just went into effect. Despite being stated in the (detailed) contract I signed in April 2015 that health insurance payments would be automatically deducted monthly, they are saying that this new policy has a monthly payment and a yearly payment. They said the yearly is based off of my income and that they “just received the bill in June for last year” (very convenient…just in time for calculating my final paycheck) and the amount taken out was for all of last year and an estimation for this year. I intend to call NHI this week and go to the school headquarters for a meeting but wanted to seek advice here first. Does this policy exist? What should I do?
There is such a thing as “second generation NHI”, but it’s not exactly new and shouldn’t be a shocking amount – unless, of course, they do a year’s worth in one month. 
Keep everything well documented and get ready to fight if the numbers don’t add up. Talk to the labor department too, not just the NHI. Good luck!
They took out over a year’s worth in one paycheck, saying they “just got the bill.” Can someone explain second generation NHI to me? I am having trouble finding much information about it. Also, when did it go into effect?
It is possible that they are under reporting your monthly salary to the NHI office but still reporting your full salary to the tax office through bonuses. You are only allowed to have the equivalent of 4 months salary paid as bonuses. The rest is taxed at 2% (reduced to 1.91% this year but let’s use 2%). the NHI website calls this supplementary premium but perhaps that is the same as second generation.
Example
You make 70,000/mo for a year but the school reports 35,000/mo in order to reduce the amount of NHI premiums that they pay (and that you pay - you benefit in this also). This was a really common practice in the past so they came up with the 4 months bonuses allowed and the 2% tax on any additional rule.
The math for one example (all math was done w/o a calculator in a drowsy state…):
70,00012=840,000 earned salary
35,00012=420,000 reported to NHI as monthly salary
420,000 additional reported to the tax office as a bonus
but…
35,0004=180,000 (allowed bonus amount and everything more than that is subject to an additional 2% NHI payment)
420,000-180,000=240,000 (subject to the 2% NHI payment)
240,0002%= 4800 additional in NHI payments
This could be the lump sum that was taken out of your paycheck. I don’t believe it is totally illegal for an employer to under report your salary to NHI but fully report it to the tax office since there is the supplementary premium provision that eventually gets paid. However this causes a damn nightmare for deducting an NHI premium from a paycheck The Ministry of Labor would likely frown on this accounting method though so you should talk to them.
To check if this is happening in your example you can calculate what they should be deducting from your salary every month by taking the rough average of your salary and multiplying it by 4.69% (total paid to NHI by employee and employer). Take that number and multiply it by 30% (the employee’s deduction). Compare vs your monthly NHI premium deduction. If the difference is considerable (like 2x) then this is likely the reason for the deduction.
Thanks! That helps a lot. I did a rough estimate and the amount they took out of my last paycheck is about equal to the entire amount they should have deducted (4.69% then 30% as in the advice above) so something weird is definitely going on. They are trying to say that the policy only started in 2015, that they just found out the amount to deduct, etc. I don’t know why they would need to wait a year and a half to deduct the second generation nhi because I never received any bonuses or anything. I was paid an hourly rate based on the hours for the month plus a couple of small “allowances” that were the same each month. I will definitely be following the advice here.
Bonus is not what you think of as a bonus and it is only an accounting term in this discussion.
They pay you 70,000 (just a number) for the hours that you worked.
They declare your salary as 35,000/mo so that your NHI premium is low but they report a 35,000 bonus to the tax office such that your entire salary is reported in a roundabout way. The supplementary NHI premium is calculated using the reported bonus.
I would be tempted to go into the Ministry of Labor and tell them ‘I don’t know what the hell is going on. It doesn’t make any sense and they can’t explain it correctly but they deducted a lot of money from my last paycheck. Are they screwing me?’ And let the MOL sort it out.
I have a suspicion that they can only wait for so long to retroactively deduct something like this and they might have waited too long. They should have paid this supplementary premium in Jan/Feb of each year for the previous year (I think). One thing to keep in mind is that they can’t calculate it until the tax year is complete and this is why doing it this way becomes a damn nightmare for accounting.
Oh I see what you’re saying. I’m going to have a meeting with them and see what they say first. If I’m not satisfied, then I will contact MOL. The things concerning me now are that the amount seems to be way too high (and higher than other teachers at the same school), that it shouldn’t take 6 months for them to figure out last year’s amount (they said they just got a “bill” for last year…does NHI send bills for this stuff?), that they said its a “new” policy, that it wasn’t in our contract, etc. It just seems that something shady is happening. Thanks for your help!
I’m not familiar with NHI calculations or deadlines, but you should be able to see your salary reported for tax in the withholding statements for 2015, and if you’ve told the employer you’re leaving Taiwan they should be preparing your 2016 statements already. If there’s anything improper about the deductions, they’re probably in violation of Art. 22 Par. 2 of the Labor Standards Act. (Even if the numbers add up, the length of the delay for the NHI deductions may cause the labor department to view the employer as not having paid you fully on a regular basis thus affecting your livelihood, or something to that effect.)
He was paid fully each month. His livelihood wasn’t affected at all. The issue is whether or not they have to notify him of the supplementary insurance deduction within a certain period of time for the previous year. The OP hasn’t been really clear but is the supplementary deduction for 2015 or 2016? This is something that doesn’t get calculated (and paid) until the end of the year. They should have paid this (for the 2015 year) months ago I believe but they didn’t notify him until July about it. It is likely that he also owes this supplementary deduction for 2016 though and this might be what was deducted.
The other issue is whether or not the tax office and NHI will get involved since they appear to flagrantly be undeclaring his salary and declaring large bonuses. I don’t think they would since the supplementary NHI eventually gets paid.