Insider Economy Countdown for Provident Funds

Countdown for Provident Funds

As from today, March 1, when contributions to the island’s National Health Scheme start, the countdown is on for the abolishment of Health Funds provided in collective agreements and private health plans to employees through insurance companies.

After one and a half years, and more specifically as from June 1, 2020, when the full implementation of the NHS is set to take place, no health funds that currently cover tens of thousands of employees based on provisions in their collective agreements will be in existence.

Yesterday, employers’ organizations (KEVE and OEB) shook hands with trade unions (SEK, PEO, DEOK) over the management of health insurance regulations provided in collective agreements because of the NHS so as to avoid double payments but also for insured employees to be covered. The agreement, which also applies to employees of public legal entities, is based on four axes:

From 1/3/2019 to 31/5/2019, businesses and employees will continue to pay full contributions to existing corporate health insurance plans under relevant collective agreements. These contributions will be made in parallel with the contributions made to NHS.

For the period 1/6/2019 until 31/5/2020, contributions to corporate Health Funds are halved.

On 1/6/2020, with the full implementation of the NHS, the contributions of employees and employers to Health Funds of trade unions are terminated.

For cases where Health Plans are operating beyond those of unions agreed in Collective Agreements, negotiations between the two parties will take place.

In simple terms, the agreement provides that from this month and up until the end of May employees will continue to pay an average of 0.5% to 2.5% for health insurance under a contract and will also pay 1.7% for NHS. Employers will continue to pay the same amount they do today, plus 1.85% for the NHS.

Moreover, from this June till the end of May 2020 when NHS will be fully implemented, both workers and employers will pay between 0.25% and 1.25% plus the NHS. As of June 2020, employees with collective agreements will only pay 2.65% for NHS and employers 2.90%.

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