Corporate supplementary health insurance and URSSAF inspection: how to avoid adjustment risks?

Since 1^st January 2016, all employees must have access to minimum supplementary provident coverage in order to cover the costs generated by an illness, maternity care or an accident (Article L. 911-7 of the French Social Security Code). This provident scheme is called a "health costs" scheme or, in everyday language, a "supplementary health insurance” (mutuelle) scheme.

As part of the formalities for setting up a company, and when the company hires its first employee, setting up a supplementary insurance scheme is one of the points to which we draw our clients’ attention for two main reasons.

The first reason arises from the provisions of employment law according to which the employer, which does not offer supplementary health insurance to its employees (or which proposes a scheme that does not comply with the minimum base provided for by the legislation), incurs liability towards its employees.

In this context, the employer is then exposed to the risk of being convicted before the Industrial Tribunal, which can range from a "simple" claim for damages due to the loss of the benefit of the supplementary health insurance or the non-fulfilment of the obligations in terms of provident schemes, to a more substantial claim for medical expenses on the grounds that the employer has not respected its legal obligation to set up minimum health cover. These convictions can sometimes amount to several thousand euros.

The second reason results from the application of the provisions of the French Social Security Code.

As a reminder, pursuant to Article L. 911-7 of the French Social Security Code, there is an obligation on the employer to finance the supplementary health insurance scheme up to a minimum of 50%.

This employer's contribution may be exempted from social security contributions if the following exemption conditions are fulfilled:

• The collective nature of the scheme, which must thus be put in place for the benefit of all the company's staff or an objectively defined category of staff;
• The mandatory nature of the scheme, which must be imposed on all employees included in the defined scope (except in cases of exemption that are well defined);
• And compliance with the applicable rules on "state-approved contracts".

Setting up a company supplementary health insurance scheme must also be strictly formalised. The employer must set up the scheme via a specific legal instrument, namely either conclude a collective agreement, or go through a referendum, or draw up a unilateral employer decision (the much-vaunted "DUE") (Article L. 911-1 of the French Social Security Code).

Failure to comply with these conditions will result in the employer possibly having to forfeit the social security benefits provided for by the legislation.

In the event of an URSSAF inspection, the inspector is responsible for verifying that all the conditions listed above have been met. Otherwise, the amounts paid by the employer in respect of the employer's contribution to the supplementary health insurance scheme will be included in the basis for calculating social security contributions over a period of three years.

In practice, the insurer must offer the employer a scheme that complies with the obligations regarding state-approved contracts.

It should be noted, however, that few insurers inform their clients of their obligation to comply with a number of formalities towards their employees, other than to send them the affiliation documents and information sent by the insurer itself.

However, as explained above, properly carrying out the formalities for setting up the scheme vis-à-vis employees is as important as the content of the scheme itself, so that many companies are exposed to URSSAF adjustment risks, of which they are generally not even aware.

So, how can we limit the risks of being subject to adjustment in the event of an URSSAF inspection?

With a good lawyer, it is possible to anticipate this!

As we have seen, the first point to watch out for is the employer’s obligation to ensure that the legislation and collective agreements that apply to the company are respected (both in terms of formality and content, namely the contribution rate provided for in the contract, type of cover, services offered, scope of application / scope of the scheme, for each category of employee).

This initial verification work is far from useless since we regularly encounter, in our cases, sometimes significant differences between the applicable provisions of the collective agreement and the schemes put in place.

The second point to watch out for is the file which will be submitted to the inspector in the event of URSSAF inspection and which must include all the documents required by the legislation.

Thus, this file will be complete only if the following documents and information can be sent to the administration:

• The general terms and conditions and the special terms and conditions of the scheme, in addition to the table of cover for each category of employee (in general, these documents are provided by the insurer when joining the scheme);
• The basic text for setting up the scheme in the company, namely the collective agreement, the legal instrument proving the referendum and its result, or the unilateral employer’s decision. Note that this text may need to be reviewed when the contract or scheme is modified;
• The letter proving that these documents have been sent to each employee, which must be dated and signed by the latter;
• Finally, in the event of exemptions from affiliation, all the documents required by law, by the collective agreement or by the basic text (according to its specific provisions), must be sent (employee's request, possible proof, employer's response, etc.).

If the file sent to the administration is complete, then there will be a low risk of URSSAF adjustment.

On the other hand, if the file is incomplete, or does not comply with legal or collective agreement requirements, the risk of URSSAF adjustment will be all the greater.

As a matter of principle, the adjustment will concern the total amount of contributions paid or that should have been paid by employers to finance this cover. The cost may therefore be steep...

Admittedly, the legislation allows contributors to benefit from a preferential measure consisting in limiting the adjustment only to employees whose situation is not compliant (either because their coverage does not meet the criteria related to the scheme being collective and mandatory, or because the employer is not able to produce the supporting documents requested by the URSSAF).

Nevertheless, this rule provided for in Article L.133-4-8, II of the French Social Security Code stipulates that it is possible to benefit from a "reduced adjustment" if the employer reconstitutes, "in a convincing manner", the missing sums. It will therefore be a question of assessing the information provided by the employer, which may give rise to different assessments depending on the case.

In addition, although this rule allows the employer to limit the amounts generated by an adjustment, the fact remains that the amounts to be paid are most often high if the workforce is large.

It should also be recalled (and this is also provided for by Article L.133-4-8 of the French Social Security Code) that in the presence of an adjustment due to the scheme not being collective or mandatory, the employer cannot ask the employees concerned to reimburse the employee’s share of the adjusted contributions. (Article L.133-4-8 of the French Social Security Code)

We assist our clients in the drafting of company collective agreements or DUE or in preparing referendums necessary for setting up or modifying supplementary health insurance and provident schemes.