Medical insurance premiums paid by the company will be exempt in-kind benefits

The tax treatment of health insurance in the workplace frequently generates doubts, especially when the policy includes coverage for family members. The Dirección General de Tributos (DGT) has specified the scope of the exemption applicable to these premiums in Personal Income Tax (IRPF).

What the DGT has resolved

The ruling establishes a clear distinction based on who bears the economic cost of the premium. According to the tax authority's criteria:

• Premiums assumed by the company: When the company pays the employee's premium without any deduction from their payroll, said amount constitutes an in-kind benefit. In this case, it is possible to apply the exemption provided for in article 42.3.c) of the IRPF Law.

• Premiums for spouses or family members: If the company acts merely as a payment intermediary and the cost of coverage for the family member is deducted from the employee's payroll, there is no in-kind benefit. Since the employee is the one covering the expense, it is a payment management process that does not allow for the application of the tax exemption.

What it means for you

For companies, this criterion implies the need to correctly segregate concepts in the payroll. Not all health policies managed by the company have the same tax treatment. If the company decides to cover the cost of a family member's coverage, this is not considered a tax benefit for the employee, but rather an expense that the employee assumes directly.

For the employee, the tax advantage of having exempt health insurance only materializes when the company assumes the cost of their own premium. Any amount intended to cover other members of the family unit that is passed on through the payroll lacks the in-kind benefit exemption.

What should be done

It is necessary to verify the structure of collective health policies and how charges are reflected in salary slips. Companies must distinguish between premiums they assume as a direct cost and those in which they act as payment intermediaries to avoid errors in determining in-kind benefits and to ensure compliance with IRPF regulations. It is recommended to assess each particular case according to the policy's contracting model.