A salary increase may symbolize a company’s commitment to employee welfare. But what is the meaning of a salary increase without protection to cover the risk of their expenses in the health sector, old age, and so on? Based on research conducted by Lifepal.co.id through survey data from the Central Statistics Agency and Willis Towers Watson, the increase in health costs in Indonesia reaches 10% per year. Unfortunately, the increase in health costs is much higher than the increase in employee net salary, which averages 4.3% and is also higher than the average annual inflation. If an employee falls ill or dies, but does not have insurance, it is not only them who will be financially burdened. The company he or she works for will also be burdened due to a decrease in productivity. In addition, there will be problems in the company’s cash flow because the company must cover medical expenses or provide compensation to the employee’s family. That is why business owners should consider providing health insurance for their employees. But before you as a business owner make a decision about this, first know the intricacies of insurance for employees.
Insurance for employees falls under the category of group insurance
A group insurance policy can be defined as an insurance policy issued by an organization that purchases insurance coverage for a specific group. One of the most obvious differences between individual and group insurance is the contract. A group insurance contract is not for insuring a single person or family, but a group. The insured party, i.e. the employees, are not the ones who make and are entitled to receive a copy of the master contract. Instead, they receive a “certificate of insurance” from the policyholder, which in this case is the company that employs them. Generally, group insurance is an employee benefit program organized by companies for their employees. Some of the common benefits provided include group health insurance, group life insurance, and group pension programs.
Who pays for this employee insurance premium?
In the concept of group insurance, the premium can be charged to the company (policyholder) or to the insured employee. If the company pays, then this insurance program is often called a non-contributory plan. But if it is the other way around, it will be called a contributory plan.
With BPJS Health and health insurance, employees will be greatly helped with medical treatment.
Health insurance will certainly be needed by employees because it can cover hospital costs (hospitalization), doctor fees (outpatient care), surgery, to various treatments that include medicines and so on. The existence of this health insurance will certainly be very helpful for employees. The reason is, this insurance will be very useful when employees need quick medical action, without going through the referral process for general practitioners or hospitals. Meanwhile, BPJS Kesehatan, as must be provided by the company based on Government Regulation Number 86 of 2013 concerning Procedures for Imposing Administrative Sanctions on Employers Other than State Organizers and Everyone, Other than Employers, Workers, and Recipients of Contribution Assistance in the Implementation of Social Security, can certainly be used to cover other medical expenses that cannot be covered by health insurance from the company.
Group life insurance protects employees from the risk of loss of income
Instead of having to pay compensation in the form of large amounts of cash when an employee dies, group life insurance can be a solution. Companies can register their employees and determine the amount of life insurance based on the level of their position. However, make sure that the sum insured is greater than their monthly salary. In group life insurance, employees also have the right to choose their own beneficiaries. Death benefit payment options can also be made at once(lump sum), and others according to the provisions of the heirs.
Group pension programs provided by insurance companies can reduce taxes
In Indonesia, the most well-known programs are the BPJS Old Age Security (JHT) and the BPJS Pension Security (JP). The adequacy of pension funds certainly cannot be guaranteed with these two instruments due to inflation. If life insurance aims to cover the risk of loss of income for the employee’s family due to death or total disability, then the pension program is very useful for dealing with the risk of living too long that employees will experience. Insurance has a product called the Financial Institution Pension Fund (DPLK) that can be chosen by the company. It should be noted that based on Law Number 36 of 2008 on Law Number 7 of 1983 concerning Income Tax, pension fund contributions paid by employees to DPLK can be a deduction for employee income tax (PPh 21). The contribution component will be included in the deduction costs in addition to job costs and BPJS JHT contributions. Those are the things you should know about insurance and group pensions that can be provided by companies. In essence, salary increases or positions are important for employees’ career lives, but the need for protection is no less prestigious than those two things. These financial products can be a solution to fulfill employer obligations to employees, overcome cash flow, and retain qualified employees.
