The health insurance is one of the benefits most valued by professionals in Spain. Include it as part of a plan to flexible remuneration allows companies to improve their value proposition without increasing wage costs and, at the same time, offers professionals significant tax savings.
In this article we explain the advantages of health insurance as flexible remuneration, how it is taxed in the payroll and what limits exist, as well as how to implement it in a simple way in your company.
Advantages of including health insurance in the flexible remuneration package
Advantages for professionals
- Real tax savings (personal income tax): The health insurance premium included in the flexible remuneration is exempt up to €500 per insured person per year (employee, spouse and children, except for the foral territories of the Basque Country) and €1,500 per disabled person. This reduces the taxable base for personal income tax and monthly net increases without increasing the gross salary. Any amount above the limit is taxed as remuneration in kind.
- Better access to health care: Allows faster appointments with specialists, The accessibility of the centres is also improved by the use of a faster diagnostic test and greater capillarity of the centres. This flexible access favours early diagnosis and timely treatment, with a direct impact on quality of life.
- Reconciliation: The possibility of including spouse and children under the same policy concentrates management in a single product and often improves pricing due to economies of scale. It also makes it easier to coordinate appointments and family coverage, which reduces paperwork and domestic stress.
- Well-being and tranquillity: Having private cover provides security against unforeseen events and reduces the uncertainty of waiting lists. This translates into less stress and a better perception of control over one's own health.
Advantages for the company
- Improve the wage offer without raising the total cost: Flexible remuneration optimises the employee's net worth with the same compensation budget. It is a way to compete on wages without raising the fixed rate, The package will be better tailored to the actual preferences of the workforce.
- Attracting and retaining talent: Health insurance is one of the most important most valued benefits in selection and key to retaining critical profiles. It provides a tangible advantage over companies that only offer a fixed salary.
- Less absenteeism and more productivity: Faster diagnosis and treatment reduces long-term sick leave and downtime between tests. The result: lower absenteeism and teams returning to their usual performance sooner.
- Brand reinforcement: Integrating health into the remuneration package communicates a real commitment to wellbeing. Improving Employer Branding and the perceived culture of care, an increasingly decisive factor in choosing a company.
How is health insurance taxed in the payroll?
When a company offers health insurance to its teams, this is considered as payment in kind, but with an important advantage: in the IRPF is exempt from taxation up to 500 € per year for each insured person. (the professional himself/herself, his/her spouse and each child, except in the Basque Country), or up to €1,500 in the case of a person with a disability.
This means that, if the cost of the insurance falls within this limit, it is not added to the employee's taxable income and therefore does not increase his or her tax burden.
If the amount exceeds €500 per person, only the excess will be taxed.
In addition, health insurance is also attractive for the company, as it can be counted as a deductible expense.
In other words: the benefit is twofold, both for the professional and for the company.
How much is health insurance tax deductible?
- For the worker (IRPF): the health insurance premium included in a flexible remuneration plan is exempt up to €500 per year for each insured person (professional, spouse and children), except for the foral territories of the Basque Country) and up to €1,500 in the case of disability. The amount exceeding this limit is taxed as remuneration in kind.
- For the company (Corporate income tax): company health insurance is tax deductible as a personnel expense as long as it is linked to the activity, issued in the name of the company and correctly accounted for as remuneration in kind in the payroll. Thus, accounting for health insurance as flexible remuneration allows the company to optimise its taxation without increasing salary costs.
What is the maximum amount that can be spent on health insurance in flexible remuneration?
There is no single “hiring ceiling”, but the personal income tax exemption is limited to €500 per person (or €1,500 if disabled). Any excess is taxed as salary in kind and is subject to social security contributions.
How to implement health insurance in a flexible remuneration scheme?
Implementing health insurance within a flexible remuneration plan requires some key steps to be taken to make it beneficial for both the company and the teams:
- Define policy and eligibilityThe following are included: groups included, possibility of adding family members and periods of membership.
- Take out the policy in the name of the company. (a requirement to apply the IRPF exemption) and negotiate hedges and premiums.
- Communicating to teamsexplain how the system works, what tax savings they get and how they can include their family members.
- Set up payroll and HR. HR.correctly reflect the exempt amount and, where applicable, the part subject to personal income tax; report the full premium to Social Security as taxable remuneration in kind.
- Monitoring and complianceThe following are the main functions of the system: controlling the limits per person, managing registrations and cancellations, and keeping tax documentation up to date.
Implementing company health insurance with Edenred
At Edenred we make it easier for companies to managing health insurance as part of your flexible remuneration plan.
With Edenred & iHealth, companies can:
- Optimise its social benefits policy without increasing costs.
- Give your employees access to a company health insurance with tax advantages.
- To have a simple, digital management to integrate this benefit into the payroll.
In this way, Edenred becomes a strategic ally to improve the competitiveness of your company and the well-being of your teams.
Conclusion
The health insurance in flexible remuneration combines tax saving, welfare y agility in healthcare. Properly implemented, it improves wage competitiveness without raising the total cost and helps attract and retain talent. With Edenred, The deployment is swift, orderly and in full legal alignment.
