On the 1st of January 2016 it became mandatory for every company under French social law to offer life and health insurance (called “prévoyance” and “mutuelle” in French) to its employees.
What does this means?
What will be the cost for the company and for the employees? And for what benefits?
How does the company setup these contracts?
The French labour law can appear very complex to a foreigner. Our job is to simplify it to the core issue you must deal with.
Therefore, we will see, as simply as possible, what are your legal requirements, how much will it cost you and how to best set it up.
Cost and benefits
Now that you know what contracts you need what will it cost you? And for what benefits?
The French labour law may be complicated but in the matter of insurance contract some things are universally simple.
The more you pay the more you get.
For the life insurance, the minimum cost is of 1.5% of the slice A of the officer’s salary (from 0 to 3218 € in 2016 check our web site for more detail). This contribution is paid 100% by the employer.
With this cost, the benefit is only for the employee. It is a lump sum paid to his (or her) heirs’ should he die. And a lump sum or an annuity should the employee be incapacitated.
As we indicated previously, most of the collective bargaining agreement exceed the law. They usually indicate a higher rate of contributions but with higher benefits as well.
Why would you choose a more expensive life insurance?
Except for the obvious HR reason; to provide a benefit to your employee and avoid losing the employee, you company can benefit from a life insurance contract.
When and employee is on sick leave the French labour law state that company must keep paying the employee.
With the correct life insurance contract, the insurance company can reimburse you the salary of your employee when he is on sick leave. The level of reimbursement will change based on the cost of the contract.
Also, please note that except for the minimum legal cost paid 100% by the company, the rest of the cost can be split between the employer and the employee.
The minimum cost of the life insurance will depend on the insurance company you choose. Whatever the case it will a monthly lump per employee. The lowest rate we could find on the internet is of less than 10€ per month.
The cost of the health insurance contribution can be split between the employer and the employee.
The benefits of the health insurance are only for the employee. The benefit is that when the employee has health expenses (doctors, hospitals, drugs …) if the social security doesn’t fully reimburse the employee, the health insurance will reimburse part of what is missing from the social security.
The level of reimbursement depend on the cost of the insurance.
French Payroll Expert advice
When you choose a life insurance you must take into account the HR benefit from it but also the financial benefit. Do you have a lot of sick leave in your company? What is the cost of the sick leave compare to the cost of the insurance? But also do not forget the HR benefits. Do not hesitate to ask you payroll provider what is the usual rate in your line of work.
As the health insurance gives no direct benefit to the company, choosing your health insurance is only an HR benefit Vs financial cost matter. If your employees already have a private health insurance you may want to ask them what the benefits are and align your insurance contract with it.