Employers may choose to pay for their employees’ voluntary (private) health insurance. This is not a requirement but a benefit, so it’s not compulsory.

Paying voluntary (private) health insurance premiums does not exempt the employer from their obligations to contribute towards compulsory health insurance (state insurance).

The Individual Income Tax Law and the Law on Mandatory Social Security Insurance Contributions provide certain exemptions for private health insurance premiums.

Article 14b of the Individual Income Tax Law stipulates that voluntary health insurance premiums that are paid for by an employer will not be treated as income for that employer. Practically speaking, this means that employers do not pay taxes or social contributions on income used to pay private health insurance premiums for employees up to a certain amount. It’s important to note that this Article relates to situations where the employer arranges a contract and pays the contracted premium on behalf of their employees.

The Law on Mandatory Social Security Insurance Contributions sets the limit for the non-taxable amount of private health insurance premiums in Article 13 to 5,757 dinars (valid as of the writing this post). This limit encompasses voluntary health and pension insurance.

If the employer also pays for additional pension insurance, the sum of these two amounts shouldn’t exceed the non-taxable amount (5,757 dinars). Otherwise, the employer is liable for taxes and social contributions on the premium.

Article 21a of the Individual Income Tax Law stipulates that no income tax is paid on voluntary health insurance premiums that the employer withholds and pays for from the employee’s earnings. Notice that this Article provides for premiums that are deducted from employees’ earnings. In this case, the employee arranges health insurance on their own, and the employer pays for it from earnings withheld. Therefore, the employer isn’t exempt from social contributions but rather income taxes alone.

From the aforementioned, we can conclude that it’s much more favorable for the employer to arrange health insurance. In the case outlined in Article 14b, premiums are tax-free up to a certain amount. In the second case, premiums don’t carry income tax, but employers are still liable for compulsory social insurance.

In conclusion:

• Employers can arrange for additional health insurance for their employees
• Employers negotiate insurance contracts in their name
• The insurance provider delivers an invoice to the employer
• The invoice is treated as a business expense
• According to Article 14b of the Individual Income Tax Law and Article 13 of the Law on Mandatory Social Security Insurance Contributions, employers are exempt from taxes and contributions up to the amount of 5,757 dinars per employee per month.
• If additional pension insurance is added, the sum of these two premiums is not to exceed the stated amount. Otherwise, the exceeding amount is treated as income (subject to taxes and contributions).