Our expert provides details of a new law effective 1 January 2016 that will require all employers to provide medical insurance to staff
Currently in France, basic social security cover does not refund medical expenses in full. In an effort to provide improved health care to all salaried employees, the government has ruled that all companies employing staff in the country must provide additional medical insurance.
Where the employer already provides a medical plan, they will need to make sure it is compliant with the new requirements and take all actions to upgrade their existing plan before 1 January 2016 if necessary.
If the employer doesn’t have a medical plan for staff, it must be set up as soon as possible and become effective on 1 January 2016 at the latest.
Key items to be checked in order to comply with the new law:
- Minimum coverage to be offered by the plan
- Insurance premium cost split
- Mandatory enrolment
- Tax-compliance of the plan – avoiding the taxable benefit status
- Possible exemptions from the employees’ mandatory enrolment
- Enrolment of employees’ dependents: optional or mandatory
Minimum plan coverage
The plan must be compliant with the “contrat responsable” rules. It must cover at least the following medical expenses:
- The minimum social security fee (“ticket modérateur”) for medical visits
- The minimum daily hospital fee (“forfait journalier”)
- Dental fees
- Optical fees
Insurance premium cost split
Insurance premiums must be paid at least 50% by the employer. The employer can choose to pay a higher share of the cost.
Enrolment must be automatic and mandatory for all employees, otherwise it will be regarded as an optional and therefore taxable, benefit.
Plan tax compliance – avoiding the taxable benefit status
In order to be processed as a non-taxable benefit, some formalities when setting up or upgrading your plan must be completed. The type of formalities depends on whether or not your company is affiliated to a Collective Bargaining Agreement (CBA) or Branch which has already defined a structure for the medical plan:
1. Plan set up as part of a Branch or CBA: strict implementation of the CBA criteria
Some branch agreements and collective bargaining agreements have already defined a mandatory medical plan structure, or will do so before 1 January 2016. If you depend on a Branch agreement or a CBA which has negotiated a specific plan structure, you only need to implement or upgrade your plan according to the criteria described in the agreement without further formalities.
2. Plan set up outside a Branch or CBA: “Décision Unilatérale” system
Where you don’t depend on any of these agreements, or you judge the structure defined in the agreement insufficient for your staff (for example: poor level of coverage compared to what you already offer or what you want to offer to your staff), you will have to set up your plan or upgrade your plan’s conditions by drafting and signing a document called “unilateral decision” in order to establish the plan as mandatory and non-taxable. This system for operating outside of the CBA is called “Décision Unilatérale” in French. The existence and quality of this document is crucial for your plan to qualify as a non-taxable benefit.
The décision unilatérale must be signed by the employer and must be sent or given to each individual employee against signature. Employees can sign all on the same list called “liste d’émargement” or on an individual certificate of information. The décision unilatérale and the list of employees’ signatures or individual certificates will be requested by the social security inspector in case of a social security audit (“contrôle Urssaf”) in order to assess the compliance of the plan.
Possible exemptions from the employees’ mandatory enrolment
Possible exemptions from enrolment must be carefully listed in the décision unilatérale in order to make sure the plan remains non-taxable. The employer must inform the employees of the consequences of refusing the enrolment. In order to benefit from an enrolment exemption, the employee must submit a formal exemption request stating they understand the consequences of not being enrolled. The only possible exemptions reasons are described in the following table:
Exemptions possible under the “Décision Unilatérale” system
||Supporting documents needed
||Exemption possible until
| Employees who started before the plan was set up
|| No document needed
|| No limitation
| Apprentices or fixed-term contracts of more than 12 months
|| Certificate of private coverage showing the same level of guarantees
|| Expiration of the private coverage
| Apprentices or fixed-term contracts of less than 12 months
|| No document needed
|| End of the 12 month period
| Part time employees and apprentices with a low wage
|| Evidence showing that the employee premium deduction would exceed 10% of their gross salary
|| No limitation
| Employees who already had a private insurance before they joined
|| Certificate of coverage by private insurer showing the expiration date of the current private coverage
|| Exemption possible only during the first year. The employee must give termination notice to their private insurer before the automatic renewal, and as soon as their private coverage expires, they will have to be enrolled into the company plan
| Employee who is already enrolled as a dependent of their spouse’s mandatory company plan
|| Certificate of registration as dependent of the spouse’s mandatory company plan
|| When the employee ceases to be covered by their spouse’s plan, they will have to be enrolled into the company plan
| Employees who benefit from the CMU or ACS (government plan offering free insurance to unemployed workers)
|| Certificate of CMU or ACS coverage
|| As soon as the CMU or ACS coverage expires
Enrolment of employees’ dependents: optional or mandatory
You can decide that your plan will cover your employees only or that your plan will cover the employees and their dependents.
If the plan covers both the employees and their dependents, there are two options: mandatory enrolment of the dependents or optional enrolment of the dependents:
A. Mandatory enrolment of the dependents
If you decide that the dependents’ enrolment is mandatory, the employer pays part of the dependent’s insurance premium and this part will not be treated as a taxable benefit.
Exemptions to the employees’ dependents’ enrolment under a mandatory enrolment scheme:
- Spouses working within the same company - only one spouse will have deductions on their payslip; the main deduction for themselves and the additional dependents deduction for their spouse. The other spouse will not have any deduction from their payslip.
- Spouse covered by their own company’s mandatory plan: they will have to provide a certificate of mandatory coverage.
B. Optional enrolment of the dependents
If you decide that the dependents’ enrolment is optional, there can be two situations:
- The employer pays part of the dependents’ insurance premium - this part will be treated as a taxable benefit.
- The employer doesn’t pay a part of the dependents’ insurance premium - the employee pays 100% of the dependents’ insurance premium - this will not be treated as a taxable benefit.
Your insurer or broker should be your primary point of contact for setting up a plan, or upgrading an existing plan and providing a decision unilatérale template if necessary.
Got questions? Contact our experts in France.
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