Overview of the Tax Changes for Insurers
Starting in 2026, the Mexican Federal Income Tax Law of 2026 will no longer allow insurers to claim the Value Added Tax (IVA) they pay when compensating a claim. This change, resulting from an agreement between the federal government and insurance companies, will affect not only insurers but also private hospitals, according to AUNA executives.
Who is AUNA and why are they relevant?
AUNA is a healthcare and oncological services network offering Oncosalud Mexico, an oncology insurance product. Roberto García, the General Director of Oncosalud Mexico, has raised concerns about the tax changes’ impact on both insurers and hospitals.
How do these tax changes affect insurers and hospitals?
García explained that the tax change has increased healthcare costs for individuals with major medical expense insurance by 16%. In the Mexican insurance sector, the profitability of major medical expense coverage is only between 2% and 6%, while 80% of costs are attributed to claim payouts. With the additional 16% IVA that insurers can no longer claim, they will likely seek cheaper hospital, medical, or medication options to offset these increased costs.
This shift towards more cost-effective alternatives may intensify competition for high-quality hospital infrastructure investments. Another possible alternative is that insurers raise premiums for their clients, as some companies have already announced. Without reducing claim costs or increasing premiums, the tax change could potentially lead to insurance company insolvency.
Background on IVA Condonation
Historically, insurers claimed the IVA they paid for hospital or auto repair services to offset damage claims. This practice created a net tax effect, allowing insurers to pay less in taxes. However, with the recent agreement, unpaid IVA from 2024 onwards has been virtually condoned. Starting in 2025, insurers must now pay the tax according to the new criteria.
For 2025 payments, the government will provide a fiscal stimulus to enable insurers to pay in installments throughout 2026 without penalties, interest, or recharges.
Which Insurance Companies Have Announced Price Increases?
- Axa Seguros: Increased major medical expense insurance policies by 20-21% for 2026.
- Seguros Monterrey: Also raised major medical expense insurance by 20-21% for 2026.
- GNP Seguros: Informed agents of a 6% increase in major medical expense insurance due to the tax change.
- Quálitas Compañía de Seguros: Anticipated a 3-5% annual increase for auto insurance policies in 2026.
- Grupo Financiero Banorte: Announced that a portion of the fiscal change impact will be passed on to clients, though specific figures have not been disclosed.
