HR receives two offers for the same purpose. One is a private clinic's “corporate healthcare package”: an annual subscription, specialist examinations, laboratory tests and screening at the clinic's own outpatient facilities. The other is group health insurance from an insurer, with a care coordinator and a nationwide partner network. The lists of services in the two brochures are often similar and the prices are comparable too, so decision-makers often lump them together. We see that the difference lies not in the list but in the legal nature of the document – and this determines the scope of cover, the route for resolving disputes and the taxation. This article unpacks that difference; a separate article of ours covers the two arrangements within insurance, the network-based and the reimbursement model.
- A clinic subscription is a healthcare services contract with a provider, whereas health insurance is the acceptance of risk by an insurer under the Insurance Act (Bit.) – the two documents may promise a similar list of services, but on a different legal basis.
- Taxation is not the same either: under the insurance rules of the Personal Income Tax Act (Szja tv.), the group insurance premium is typically a certain specified benefit (a Hungarian employer-taxed benefit category), while a clinic subscription, as a service, is one only if it is provided on identical terms to all employees or to a group defined in an internal policy – otherwise it may be taxed as wages.
- In a dispute, the insurer is backed by the supervision of the MNB (Hungary's central bank and financial supervisor) and by the Financial Arbitration Board (PBT), the clinic by the patients' rights and consumer protection route; before deciding, check who the contracting partner is.
Two legal forms, two promises
A clinic subscription is a healthcare services contract: the company buys a predefined range of services for its employees from a healthcare provider, and the provider delivers them with its own doctors and outpatient facilities. The legal relationship is governed by the contract rules of the Hungarian Civil Code (Ptk.) and by the Health Care Act; the provider does not take on insurance risk but sells capacity. Health insurance, by contrast, is a contract with an insurer that falls under Act LXXXVIII of 2014 on the Business of Insurance (the Insurance Act, Bit.): in return for a premium, the insurer accepts risk, i.e. an obligation to organise and pay for care that qualifies as an insured event under the contract – up to the limits and in accordance with the policy conditions – even at a provider outside its own network. The insurer is subject to capital and reserving rules and to licensing and supervision by the MNB (Hungary's central bank and financial supervisor); whether a company is an insurer can be checked in the MNB's Institution Search. This is not a quality ranking of the two forms: a good clinic provides excellent care, and an insurance policy, too, pays only for what is an insured event under its contract. The difference is who bears the risk if the employee needs not one but ten examinations, or an operation.
Cover: capacity or risk-bearing
A subscription package typically covers what the clinic can provide in-house: specialist consultations, diagnostics, a screening programme, possibly a day-case procedure – at its own sites, with its own range of specialists. Surgical and hospital care, specialised examinations outside the network, or care close to home for an employee at a site outside Budapest are often not included, or are available at list price. The insurer's package works through the care coordinator, choosing among several providers, with inpatient and surgical cover at the extended levels and with annual limits; in return, waiting periods, exclusions and rules on pre-existing conditions also apply, which our article on pre-existing conditions covers. With a clinic subscription there is typically no underwriting, because the provider takes on capacity rather than risk; the limits are the list of services, the consulting hours and the location. For a company with several sites, it is therefore worth checking the network coverage of both offers on a map.
If there is a dispute: who hears the case?
With insurance, the complaints route is regulated: first the insurer's complaints handling, then the Financial Arbitration Board (PBT) operating alongside the Magyar Nemzeti Bank, or the courts; the MNB does not decide individual claim disputes, but it supervises the conduct of insurers. With a clinic subscription, an employee with a complaint about care can turn to the provider's complaints handling, the patients' rights representative and the health authority, while a contractual dispute between the contracting company and the clinic is ultimately decided by the courts; the consumer protection authority and the conciliation boards operating alongside the chambers of commerce can come into play only where a party qualifies as a consumer – the Financial Arbitration Board has no jurisdiction here, because the clinic is not a financial institution. If the provider ceases to exist or terminates the contract, the subscription fee is an ordinary civil-law claim; the solvency of insurers is framed by the solvency rules of the Bit. and by MNB supervision. This does not mean that a clinic contract is insecure – only that the safety net is different.
Taxation: insurance premium or service?
This is where the misunderstanding is greatest. The group health insurance premium is subject to the insurance rules of the Personal Income Tax Act (Szja tv.): the taxable insurance premium under Section 3 point 89 – if the premium attributable to the individual cannot be determined even by apportionment (Section 3 point 89 sub-point bb) – is a certain specified benefit (a Hungarian employer-taxed benefit category) at the payer under Section 70(6)(b), with 15% personal income tax and 13% social contribution tax on 1.18 times the premium, 33.04% in total; a separate article of ours shows the calculation. A clinic subscription is not an insurance premium but a service provided by the employer. For this, Section 70(1a) opens the way to the certain specified benefit category: if the employer provides it to all employees on identical terms and in the same manner, or, on the basis of an internal policy that all employees can access, to a group defined by job, position, length of employment, age or another common criterion not dependent on performance, and the service is actually available to those entitled to it. If these conditions are not met – for example, if it is given to individually selected employees, with a fee assigned to named individuals, without a policy – the value of the service is income from employment, i.e. it is taxed as wages: the employee bears personal income tax and social security contributions, and the company bears social contribution tax. The “actually available” condition requires particular attention with a clinic subscription: if the clinic is in one city, the benefit for employees at sites elsewhere in the country may be questionable – this has to be thought through with a tax adviser. Compulsory occupational health care falls into neither category: it is the employer's statutory obligation, not a benefit, as our article on occupational health services explains. VAT makes no difference: human healthcare services and insurance premiums are both typically VAT-exempt, so comparing prices is simple from this point of view.
Hybrid offers and the decision
On the market the two forms also mix: several clinic networks sell corporate packages together with an insurer, in the form of insurance, and behind several insurers' packages one or two large clinic partners provide the bulk of the care. The question is therefore not the brand name but the heading of the contract: who the contracting partner is – an insurer or a healthcare provider – and what it undertakes: risk or capacity. Before deciding, it is worth putting five things side by side: the list of services and the limits, the network measured against your sites, the waiting periods and exclusions, the complaints route, and the tax treatment, with your accountant. A clinic subscription can also be added to the comparison table if the company is considering it too – so the decision is made on the basis of the same criteria rather than brochures. If the company lets us know, we prepare a comparison of the offers in a single view; in both forms, the content of the contract is determined by the partner's terms and conditions in force at the time.
Have a question tailored to your own company's two offers? Book a free 20-minute consultation →
Sources
- Personal Income Tax Act (Szja tv., Act CXVII of 1995) Section 3 point 89, Sections 69–70 – taxable insurance premium; certain specified benefits under an internal policy (Section 70(1a)) and to several individuals (Section 70(6)(b)); tax base 1.18
- Insurance Act (Bit., Act LXXXVIII of 2014) – licensing requirement for insurance business, supervision and solvency rules for insurers
- VAT Act (Áfa tv., Act CXXVII of 2007) Sections 85–86 – VAT exemption of human healthcare services and insurance services
- MNB – Financial Arbitration Board (PBT) (consumer disputes with financial institutions)
- MNB Institution Search – checking licensed insurers
- Health Care Act (Eütv., Act CLIV of 1997) – patients' rights, patients' rights representative, complaints to the healthcare provider
- RSM Hungary blog: Employer group insurance – tax treatment of the insurance premium (apportionment, certain specified benefits)
- Generali: Taxation of insurance taken out by payers – 2022 (33.04% at the payer)
