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Healthcare Insurance for Small Business Owners in Sweden

Introduction to Healthcare Insurance

Even though the publicly funded healthcare system in Sweden is comprehensive, many companies offer supplementary private healthcare insurance. As a small business owner, your business can pay healthcare insurance for yourself, and also offer it as a benefit to attract and retain potential employees in your company. This article addresses how healthcare insurance affects accounting and taxation in Sweden.

Tax Deduction for Healthcare Insurance

Healthcare insurance is usually tax-deductible for businesses, meaning that the entire cost of the insurance premiums can be deducted as an expense in your company. This reduces your company’s taxable income and tax liability.

Example of Tax Deduction Calculation

If the insurance premium is SEK 6,000 per year, your company can deduct the entire amount as an expense. This lowers the company’s taxable income by SEK 6,000, and thereby also the corporate tax by SEK 1,236 (20.6%).

Taxable benefits for healthcare insurance

In addition to the possibility of deductions, it’s important to be aware of the taxation of benefits. The beneficiary of health care insurance is taxed for 60% of the insurance premium. For an annual premium of SEK 6,000, the benefit value would then be SEK 3,600, or SEK 300 per month. This also results in a cost for employment taxes of SEK 94 per month in most cases, as well as income tax for you or your employees of approximately the same amount depending on the municipality and the total income for the year. If you live in a municipality with 30% municipal tax and you have an income below the threshold for state tax, you pay SEK 90 in tax, and if you live in a municipality with 34% municipal tax and your income is higher than the threshold , you pay SEK 162 in tax.

Healthcare Insurance and Health Insurance, What's the Difference?

As both these terms occur and can be perceived as the same thing, we also want to explain the difference. Healthcare insurance is insurance that provides healthcare. Health insurance, on the other hand, is insurance that provides financial protection for income loss due to long-term sick leave.

FAQ regarding healthcare insurance

This question is not about accounting, so we are not really the right people to ask this. But it is a common question, so we want to give a general answer anyway. In Sweden, everyone is entitled to publicly funded healthcare, so you do not need to pay for private healthcare insurance to have access to, or afford, healthcare. The biggest difference with paying for private healthcare insurance is that the private healthcare insurance companies have different economic conditions and requirements than the Swedish regions responsible for public healthcare, which leads to healthcare often being offered faster. How much faster depends on which region you are residing in, as the length of healthcare queues varies greatly across the country.

The first step to implementing healthcare insurance is to contact an insurance company that offers healthcare insurance. This is offered by most common insurance companies, most common banks (they often run their own insurance companies), and companies that specialize in healthcare insurance.

Once you have signed up for healthcare insurance, the insurance company will then invoice your company for the insurance premium. In practice it works like any other invoice, and is usually bookkept on the account for deductible sickness & healthcare.

In addition to bookkeeping the insurance cost, the taxable benefit of healthcare insurance needs to be declared in the employer’s declaration. If you use a payroll program, you can preferably set up the healthcare benefit as a recurring payroll item that stays the same every month, so you don’t have to remember to do it every time. So, if we reuse the previous example with an insurance premium of SEK 6,000 per year, the recurring benefit to set up is 60% x SEK 6,000 / 12 months = SEK 300 per month.

Summary of Healthcare Insurance in Sweden

Paying for private healthcare insurance can be a complement to the healthcare provided by publicly funded healthcare. It can shorten waiting times for you and your potential employees. The entire insurance premium is deductible for the company, and the insurance beneficiary receives a taxable benefit of 60 percent of the insurance premium. This benefit is declared on the employer’s declaration.

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