HR CLUB

How to become a better employer?

Attraction and retention of workforce with

insurance benefit plan

Presented by Ferenc Truglya, Travel Insurance Line Manager

AIG Europe Limited Branch Office in Hungary

30th September 2015

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HR CLUB

What we will cover today

1. Why it’s good for the company, if it’s good for the employees?

2. Focus on insurance benefits

3. Pro & contra insurance benefits

4. Basics of building an insurance benefit plan

5. What’s about taxes?

6. Conclusion

7. Questions

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HR CLUB

Why it’s good for the company, if it’s good for the employee?Tools & methods

....satisfied employees have better performance...

...employees are the most important assets of a

company...

...qualities of the employees influence the

performance and success of a company....

We often hear that...

...big question is how to make our company more

attractive for talented people?

...companies have to offer benefits/perks

such as...

...or more frequently......flexible working hours...

...free coffee in the

office...

...meal voucher, gym

pass...

Employee

Insurance Benefits

... sometimes good salary is not enough...

...company day, family

day...

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Focus on insurance benefits

80% are less likely to leave actual job if

they get a well-structured and well-

communicated benefit package

The standard of benefit package shows

how much a company values its own

employees

For young workforce who can’t get too

high salaries compared to employees

with more job experience, attractive

benefit plans count much more

59% would take a job with slightly less

salary if a much better benefit package

comes with it

Interesting facts from 2015 Aflac Workforces Report

Source: www.AflacWorkForcesReport.com

Company sizeNumber

of

people

Do

benefits

count?

Small (3-99) 1.626 49%

Medium (100-499) 1.334 40%

Large (500+) 2.377 37%

Appreciation of benefit plans among

employees

Increase job satisfaction 79%

Increase performance 65%

Increase loyalty 66%

Workplace recommendation

to others52%

Thinking about leaving job if

benefits are poor52%

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Pro & contra insurance benefits

Benefit packages that offer insurance as well, attract and retain quality workforce much better

Employees often take a job with slightly less salary if it provides a more generous and

comprehensive benefit package including insurance Savings on salary cost

Insurance services are cheaper in a company benefit package compared to buying them as an

individual

Insurance packages containing regulal medical checks reduce the health-related employee

absenteeism and boost the employee’s general state of health and morale

Insurance benefit packages represent a gesture from the company that they take care of the

employees. People have the peace of mind because accident/sickness can happen anytime

Insurance benefits - in case of temporary disability to work - compensate for drop in income

Companies without sufficent budget for pay rise can also offer the necessary plus by launching

voluntary employee benefit program

Tax free benefit or totally free for the employer (see more later)

What’s for it?

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Pro & contra insurance benefits

The introduction of insurance benefits plan puts an extra administrative burden on a

company and it is too difficult to enroll and exit employees

The insurers ask only for periodic, often once-in-a-year headcount report, a list that

already exists in the HR department of a company

Ridig, not tailor-made insurance programs

Serious solutions are made-to-measure

Too expensive, insurance benefits are the privilege of multis, „Who has money for it?”

„It is not even obligatory.”... and similar narrow-minded way of thinking

Expensive? Compared to what? To the absent workforce due to illness? To the lack

of workforce caused by the not attractive place of work or to the resulting stagnation

of the company? A company can buy a basic insurance package for a price starting

from 50-100k HUF/year (150-300 EUR) The custom-made insurance plans always take

the company’s financial limits into account.

It is hard to make employees understand that the company gives valuable benefits

A good insurance provider can give advice in this

Frequent „negative” statements

Personal E-mail Brochures, leaflets

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Basics of building an insurance benefit planTo whom? – What? – For how much?

Defining the groups of insureds

For everyone – It is a mistake to leave out certain employee groups from the insurance

program – This mistake worsens the acceptance of the program – Them and us feeling

– It results in higher per head insurance fee

Custom-made insurance packages for the different employee levels

Frequent grouping: top & middle managers, white & blue collars, part-timers etc.

Full-time, part-time, temporary etc. employees can be insured as well

Also mother and maiden companies? – Yes! Under Freedom of Services insurance

can cross borders

Expatriated employees (Expats) can be fully insured

To whom?

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Basics of building an insurance benefit planNot only for companies

Companies of any sizeGovernmental

organizations

Associations, trade

unions, NGOsEducational institutions

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Basics of building an insurance benefit planTo whom? – What? – For how much?

Defining types of covers and sums of benefits

Frequent types of covers:

Accident & Sickness Insurance (eg.: death, permanent and temporary disability, hospital

daily cash, surgery, burns)

Critical/Dreaded Sickness Insurance (eg.: different tumors, cardiovascular diseases,

diseases of the nervous system)

Life Insurance & Permanent Disability (accidental & natural death, full or partial

permanent disability of any kind)

Private Health Insurance (eg.: private medical consultations and checks)

24 hours, worldwide cover, occupational only or occupational and commuting cover, other

customized scope of cover

Fixed sums of benefits or income-based benefits, HUF or EUR claim payments

What?

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Basics of building an insurance benefit planTo whom? – What? – For how much?

Who pays for the insurance?

Company financed

Sum of the yearly insurance premium is

influenced mostly by the company’s budget or

the chosen types of covers and sums of

benefits

Insurance can be extended to family members

of the employees

Per head insurance premium is mostly less

than 30% of the legal minimum income (see

more later)

Employed at the company = Enrolled in the

insurance plan

Leaving the comany = Exiting the insurance

plan

Voluntary, employee-financed

This solution is often used at companies

employing large number of blue collar workforce

with relatively low income and savings

A couple of hundred HUF monthly insurance

premium is paid by the employees

Insurance can be extended to family members

of the employees

It does not cost a dime for the employer

The employee can keep insurance after

leaving the company

For how

much?

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What’s about taxes?Tax-free limit - 30% of minimum income - SZJA - EHO

Side of insurance premium payment

Group life insurance

Group accident and sickness insurances

Group private health insurance

105.000 HUF x 30%

Free from income (16% SZJA)

and healthcare contribution

(27% EHO) taxes up to 30% of

the minimum income

31.500 HUF can be spent on

insurance premium per

employee per month

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What’s about taxes?Tax-free limit - 30% of minimum income - SZJA - EHO

Side of claims payment

Claims payments arising from accident and sickness insurance are taxabel if the sum of these

payments are higher than 15.000 HUF/day

Income (16% SZJA) and healthcare contribution (27% EHO) taxes must be paid on sums above

15.000 HUF

Daily hospital cash, convalescence daily cash, lump sum & daily temporary disability income

benefits are regarded as taxable above the 15.000 HUF daily limit

Depending on the insurance provider claims payments may be reduced with the sum of tax.

It is also up to the provider whether it fulfils the tax payment obligation instead of the client or not.

In case of tax payment obligation from benefit payments the insured can’t submit tax

acknowledgement through employer in that year (tax statment is always sent by the insurance

provider to the insured)

Income tax rule: 1995. CXVII Act, 1st Appendix, point 6.6 and 6.7

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ConclusionWhy does it worth dealing with insurance benefit plans?

2. Bigger attraction in the job market

Help to become an employer of

choice in the market

Economic advantages through

attracting high quality workforce

1. Cost effective benefit

Cheaper than pay-rise, it can be

tax-free

Shorter recovery time of

employees through better

healthcare services,

less absenteeism

Reduced business risk

3. Better job performance

Healthier employees

Peace of mind, relief and smaller

mental pressure on employees

due to unexpected

costly illnesses and

accidents

4. Increased employee loyalty

Lower turnover rate

Feeling of being appreciated and

being taken care of by the

employer

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Truglya Ferenc

Mail: ferenc.truglya@aig.com

Mobile: +36 30 445 5772

Employee

insurance

benefit plans

Questions