Advantages of including health insurance in flexible remuneration
Advantages for professionals
- Real tax savings (personal income tax): The first of the health insurance included in flexible remuneration is exempt up to €500 annually per insured person (employee/spouse and children, excluding the Basque Country's special tax territories) and €1,500 per person with a disability. This reduces the personal income tax base and monthly net increases without increasing the gross salary. Any amount exceeding the limit is taxed as a benefit in kind.
- Better access to health care: Allows Faster appointments with specialists, diagnostic tests in less time and wider coverage of centres. This agile access favours early diagnoses and timely treatments, with a direct impact on quality of life.
- Reconciliation La Possibility of including spouse and children Under the same policy, it consolidates management into a single product and usually improves the price due to economies of scale. Furthermore, it makes it easier to coordinate family appointments and coverages, reducing paperwork and domestic stress.
- Well-being and tranquillity: Having private cover provides security against unforeseen events and reduces uncertainty from waiting lists. This translates to less stress and a Improved 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 pay 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.
- Talent attraction and retention Health insurance is one of the most important most valued benefits in selection and retention of critical profiles. It provides a tangible advantage over companies that only offer a fixed salary.
- Less absenteeism and more productivity: With faster diagnosis and treatment, long-term absences and downtime between tests are reduced. The result: lower absenteeism and teams returning to their usual performance sooner.
- Brand reinforcement: Integrating health into the compensation package communicates a real commitment to wellbeing. Improving Employer Branding and the perception of a caring culture, an increasingly decisive factor when choosing a company.
How is health insurance taxed on a payslip?
When a company offers its teams health insurance, this is considered a benefit in kind, but with a significant advantage: in the IRPF is exempt from taxation up to €500 per year per insured person (the professional themselves, their spouse and each child, except for the Basque Country's foral territories), or up to €1,500 if it concerns a person with a disability.
This means that if the cost of insurance falls within that limit, it is not added to the worker's taxable base and therefore does not increase their tax burden.
If the amount exceeds €500 per person, only the excess will be taxed.
Furthermore, medical insurance is also attractive to the company, as it can be accounted for as a deductible expense.
In other words: The benefit is twofold, both for the professional and for the company..
How much tax relief is there for health insurance?
- For the worker (IRPF): The premium for health insurance included in a flexible remuneration plan is exempt up to €500 annually per insured person (professional, spouse, and children)., except for the Basque Country's chartered territoriesand up to €1,500 in the case of disability. Any amount exceeding this limit is taxed as a benefit in kind.
- For the company (Corporate income tax): Company health insurance can be deducted as a personnel expense provided it is linked to the activity, issued in the company's name, and correctly accounted for as a benefit in kind on the payslip. In this way, 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 allocated to health insurance in flexible remuneration?
There isn't a single “hiring cap,” but the exemption from Personal Income Tax is limited to €500 per person (or €1,500 if they have a disability). Any excess is taxed as a benefit in kind and contributes to Social Security.
How to implement health insurance in a flexible benefits plan?
Implement 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 eligibilityInclusions for groups, possibility of adding family members, and membership periods.
- Take out the policy in the company's name (requirement to apply for the IRPF exemption) and to negotiate coverages and premiums.
- Communicating to teamsTo explain how the system works, what tax savings they get and how they can include their family members.
- Set up payroll and HR.correctly reflect the exempt amount and, where applicable, the portion subject to income tax; report the full premium in Social Security as a taxable in-kind benefit.
- Monitoring and compliance: control the limits per person, manage registrations and de-registrations, and keep tax documentation up to date.
Implement company health insurance with Edenred
At Edenred we make it easier for companies to Medical insurance management as part of your flexible benefits plan.
With Edenred & iHealth, companies can:
- Optimise your employee benefits package without increasing costs.
- Give your employees access to a Company health insurance with tax advantages.
- To have a Simple and digital management to integrate this benefit into payroll.
This way, Edenred becomes a strategic ally for improving your company's competitiveness and your teams' well-being.
Conclusion
The Health insurance as flexible remuneration combines tax saving, welfare and agility in healthcare. Properly implemented, it improves wage competitiveness without increasing total cost and helps to attract and retain talent. With Edenred, the deployment is quick, orderly and with full legal alignment.
