Insurance association wants tax-free cap on employee health benefits tripled
With healthcare costs outpacing coverage, the Estonian Insurance Association is urging the government to triple the current tax-free cap on employer-paid health benefits.
The Estonian Insurance Association (EKsL) has proposed raising the annual tax-free limit on employer spending to promote employees' health from €400 to €1,200 — tripling a cap that has remained unchanged since 2018 even amid sharp increases in healthcare costs.
Association board chair Tuuli Pärenson said rising economic pressures prompted the proposal.. She cited Foresight Center data indicating that private healthcare spending in Estonia has tripled since 2010.
"The most important thing that has changed is that prices have gone up," Pärenson said, adding that they have roughly doubled — and even more in some areas.
According to EKsL figures, Estonian households currently pay 20–25 percent of their healthcare costs out of pocket, well above the World Health Organization's (WHO) recommended 15 percent.
Because the tax-free cap has remained unchanged while the range of reimbursable services has expanded, employers and workers are often forced to choose between sports and medical services.
"Ideally, the limit should be high enough to cover both," Pärenson said.
She argued that hiking the benefit cap would ultimately save the state money. Employer-paid health benefits are voluntary, but not supporting them can lead to higher public costs — Estonia already has one of the EU's highest levels of unmet medical needs, with nearly 13 percent of residents skipping necessary care in 2023.
Lower out-of-pocket costs also encourage people to seek care sooner, Pärenson continued, leading to faster diagnosis and treatment — a "clear win for public health," she said.
The association further warned that leaving the benefit cap unchanged would send employers the wrong message.
"The biggest concern is that the state would signal that investing in employees' health is not important — that it's far less valued now than it was in 2018," Pärenson said. She believes the state should make clear that the employee health benefit is "a good way to take care of your staff."
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Editor: Aleksander Krjukov, Aili Vahtla
