Attraction and retention of workforce with insurance benefit plan

1. 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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HR CLUB
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 size
Number
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 others
52%
Thinking about leaving job if
benefits are poor
52%

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HR CLUB
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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HR CLUB
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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HR CLUB
Basics of building an insurance benefit plan
To 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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HR CLUB
Basics of building an insurance benefit plan
Not only for companies
Companies of any size
Governmental
organizations
Associations, trade
unions, NGOs
Educational institutions

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HR CLUB
Basics of building an insurance benefit plan
To 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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HR CLUB
Basics of building an insurance benefit plan
To 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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HR CLUB
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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HR CLUB
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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HR CLUB
Conclusion
Why 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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HR CLUB
Truglya Ferenc
Mail: ferenc.truglya@aig.com
Mobile: +36 30 445 5772
Employee
insurance
benefit plans
Questions