What is the difference between a health fund and health insurance?
One of the most popular forms of self-care in Hungary is the health fund. However, this form of savings is quite different from health insurance, so just because you have a health insurance fund membership does not mean that you should not consider taking out insurance. And vice versa. But which is good for what, and when should you choose one or the other?
Firstly, if you have health savings, you should keep them, not cancel them. The assets accumulated in the account can be spent. It is a different matter to decide where the money should go later on: into a savings account or into a health insurance policy.
Who can use the services?
It is also important to note that, in principle, we cannot spend our health savings only on ourselves, since no one will check whether we or a relative needs orthopaedic shoes. However, the insurance is basically available for a single customer – for premium products it can be extended to family members.
When tax relief is available
Health savings are tax deductible if the client pays the tax himself, with a tax credit of 20% of the annual amount paid into the health savings account. The accumulated amount can be used for a wide range of purposes, from health services to medical aids, equipment or even baby care. You can spend as much as you have.
There is no longer any tax relief for health insurance. And the service is not as simple as the one offered by a cashpoint. You do not spend the amount you have accumulated in advance, but you can use certain services in exchange for a fixed fee. Insurance is more worthwhile if you want to use these services in the first place.
Taxation of health insurance
Although health insurance was tax-free as an employer benefit when it first came into existence, these benefits have now all melted away. Not only are they no longer tax-free, but employers are taxed in the same way as on wages. So, for example, a monthly allowance of HUF 20,000 is taxed as if it were a net salary of HUF 20,000. In other words, you have to pay tax on it:
15 percent VAT
17.5 percent (15.5 percent from July) social contribution tax
18.5 per cent individual contribution
1.5 percent vocational training contribution
In special cases, it is possible for the company to treat the insurance as other benefits, but the NAV will certainly not automatically accept this. This requires that the employer is not able to determine the insurance premium on an individual basis. This is difficult to imagine, especially in cases where the employer itself organises a service – massage, screening – and it is not possible to assess exactly who has received what. Health insurance packages are typically not like this.
What does the cost depend on?
The price of private health insurance varies widely. It does not matter which company you choose, what range of services you want to receive, or whether you sign up as an individual client or get a company package. Comparing individual offers is extremely difficult, and it is not really worth going it alone and comparing the myriad packages of dozens of insurers. It is better to use a health insurance calculator for this purpose.
It is not only the premium that counts, but also typical illnesses and lifestyle and age-related changes. On this basis, the cheapest version may not be the right one, as it is linked to a rather limited range of services. These can be paid for in a private clinic, with a little exaggeration, if the test is necessary.
What is the monthly price of the insurance?
Roughly speaking, if the monthly premium is between 15-25 thousand HUF, the average adult will already have a reasonable starting package. This does not even include any preventive screening, but it does provide a noticeable subsidy for the treatment of typical diseases. If a series of tests were to be carried out suddenly, the cost would be felt in the wallet, but the premium would cover these costs. It is important to note that as you move up the packages, the amount you can request for a particular service increases. For example, outpatient care, same-day surgery.
Payment of health insurance
You can also take out health insurance individually, but for a given annual premium, company insurance, i.e. insurance paid by the employer, is much more expensive. Without an employer, this is unlikely to be the case, although you can set up your own fleet and risk pool. If, as an employee, you have the opportunity to join such a fleet, it is well worth considering. It is important to remember that insurance is not a cash-saving instrument compared to ordinary benefits. It would certainly be more expensive if we took out the insurance ourselves.