October is when many companies draw up next year's budget. If you want employee health insurance to be in force on January 1, it is better to start comparing plans now rather than in the last weeks of December. Below is a practical plan for timing, budget, plan comparison and renewal.

Timeline: from October to January 1

To have the plan start on the first day of the year, it helps to split the work into three stages.

  • October: identify needs. List your employees, note mid-year hires and ask the team what matters most: specialist visits, dental care, sports or remote consultations.
  • November: request and compare offers. Insurers need time to prepare offers, and you need time for follow-up questions.
  • December: decision and paperwork. Sign the contract and submit the employee list before the holidays, so there is no gap in January.

If you already have a contract in force, check its end date and the deadline for notifying the insurer that you do not intend to renew it or want to change the terms. That deadline is in the contract, so do not miss it.

Budget per employee: start with the tax-free limit

Section 8, Paragraph 5 of the Latvian law On Personal Income Tax (Par iedzīvotāju ienākuma nodokli) allows health insurance premiums paid by the employer to be excluded from the employee's taxable income if they do not exceed 10 percent of the employee's gross pay calculated for the tax year, and in any case no more than 750 euros a year. The contract must run for at least one year. Under Section 14, Paragraph 7 of the law On State Social Insurance, these amounts are also excluded from the base for mandatory social insurance contributions. For the tax calculation in detail and what happens when the limit is exceeded, see our article on employee health insurance tax benefits in Latvia.

For budget planning, this leads to three practical conclusions:

  • Each employee has their own limit. 750 euros is the ceiling, but the 10 percent condition can lower it. For example, if a part-time employee's annual gross pay is 6000 euros, the tax-free portion is no more than 600 euros.
  • Employees hired mid-year usually have a lower limit, because the 10 percent is calculated from gross pay for the tax year, not from a full year's salary.
  • For days of parental leave, as well as days of temporary incapacity and maternity leave covered by a type "B" sick leave certificate, the law does not apply the 10 percent restriction proportionally, so lower income during that period does not reduce the tax-free portion.

Plan the budget by employee group rather than as one figure for the whole company. That way you see right away for whom the chosen plan stays within the tax-free limit and for whom part of the premium becomes taxable income.

What to compare between plans

Plans with similar names can differ a lot. Compare each section, not just the total sum insured:

  • Outpatient care: doctor and specialist visits, tests and diagnostics, the limit per visit and whether a referral is needed.
  • Inpatient care: day and overnight hospital stays, surgery, planned and emergency care.
  • Dental care: often an add-on with its own limit, so check whether dental hygiene is included.
  • Sports and rehabilitation: fitness classes, massage, physical therapy.
  • Remote consultations: whether online doctor consultations are included and at what hours they are available.
  • Clinic network: whether partner clinics are located where your employees live and work, especially outside Riga.
  • Waiting times: how quickly people can actually see the right specialist at partner clinics. Ask employees who already use a policy.
  • Co-payment: whether a service is covered in full or in part.
  • Family members: whether the insurer allows employees' family members to join the plan.

What to check before renewing your current contract

  • Usage summary. Ask the insurer for an overview of which plan sections were used most and which were hardly used at all. This helps you avoid paying for what the team does not need.
  • Exhausted limits. Did employees use up the limit of any section during the year, for example in dental or outpatient care?
  • Employee experience. What caused difficulties: booking appointments, filing claims, a lack of suitable partner clinics?
  • Changed terms. Check whether the renewal offer changes limits, exclusions or co-payments.
  • Employee list. New hires, leavers and roles that may need different coverage.

A renewal offer is not something to accept automatically. Comparing it with other insurers' offers shows whether your terms are still competitive.

Small companies too

Health insurance is a group product for companies, not for private individuals. Agento helps companies choose a plan starting from 2 employees, although the minimum group size can vary from insurer to insurer, which makes comparing several offers especially useful for a small company. You can find out how to request offers on our health insurance for businesses page.

The earlier you start, the more time you have to compare and negotiate, and the calmer the start of the new year will be.

Frequently Asked Questions

When should we start so that health insurance is in force from January 1? October is a good time to start: first identify what employees need, request and compare offers in November, then make a decision and sign the contract in December. If you already have a contract in force, check early by what date you must notify the insurer that you do not plan to renew or want to change the terms.
How does the tax-free limit affect the budget per employee? Under Section 8, Paragraph 5 of the Latvian law On Personal Income Tax, health insurance premiums paid by the employer are not taxed if they do not exceed 10 percent of the employee's gross pay for the tax year and no more than 750 euros a year, and the contract runs for at least one year. So for part-time employees and mid-year hires the limit can be below 750 euros, and it makes sense to budget for them separately.
Do all employees need the same plan? Not necessarily. The employer can choose which programs and what level of coverage to include, and it is often possible to set different coverage for different employee groups. The exact options and terms should be confirmed with the insurer when comparing offers.
What is the minimum number of employees for company health insurance? Health insurance is designed for companies, not private individuals, and a plan can be arranged for a company with as few as 2 employees. The minimum group size can vary between insurers, so a small company in particular benefits from comparing several offers.
Do we have to renew with the same insurer? No, you do not have to accept a renewal offer automatically. Before deciding, ask the insurer for a usage summary, check whether limits, exclusions or co-payments have changed and compare the terms with offers from other insurers.