Correct accounting of VHI expenses: transactions and nuances of tax and accounting, calculation example

Some companies, as part of the social package provided to employees, enter into voluntary health insurance (VHI) agreements in their favor. About the nuances of tax accounting for related expenses, as well as the application of personal income tax and insurance premiums to them, see our topic.

Current legislation allows the provision of paid medical services at the expense of employers on the basis of contracts, including voluntary health insurance contracts (clause 2 of article 84 of the Federal Law of November 21, 2011 No. 323-FZ “On the fundamentals of protecting the health of citizens in the Russian Federation”). The VHI contract refers to personal insurance contracts. Under such a contract, the insurer undertakes, for a fee (insurance premium) transferred by the policyholder, to pay the insurance amount established by the contract in the event of the occurrence of an event stipulated by the contract (insured event). The right to receive the insurance amount belongs to the person in whose favor the contract was concluded (Article 934 of the Civil Code of the Russian Federation). Thus, the employer, acting as an insured, can enter into a VHI agreement with an insurance company (insurer) in favor of employees, under the terms of which the employer transfers an insurance premium to the insurer, and the insurer, within the amount specified in the agreement, pays for medical services provided to employees.

How to keep tax and accounting records for VHI expenses

According to paragraph 16 of Art.
255 of the Tax Code, payments under VHI agreements are included in labor costs. Tax accounting of expenses for voluntary health insurance is carried out in accordance with the provisions of Art. 272 of the Tax Code of the Russian Federation (clause 6). From this document it follows that expenses are taken into account in the tax period in which the insurance premiums were paid.

If the insurance conditions provide for a one-time payment, then the costs should be distributed evenly over the entire period of validity of the VHI contract.

The basis for calculating the amount is the number of days in each reporting period.

Paid contributions are not the basis for calculating personal income tax (clause 3, clause 1, article 213 of the Tax Code of the Russian Federation) and insurance contributions (clause 5, clause 1, article 9 of Federal Law No. 212-FZ of July 24, 2009 ).

The obligation to charge personal income tax and insurance premiums does not arise not only when paying insurance premiums, but also in relation to the cost of services provided by a medical institution under a VHI agreement.

The limit used when calculating contribution amounts is not taken into account in this case.

Even if the company was unable to accept the entire amount of expenses to reduce the tax base for income tax, then personal income tax and social tax do not need to be charged on the difference.

In accounting, the entire amount of expenses associated with VHI is written off as expenses.

To reflect them in tax accounting, you must first determine whether they exceed the legal limit of 6% of labor costs. If they do not exceed, then the entries in accounting and tax accounting are the same.

If the permitted limit is exceeded, the tax accounting scheme will be as follows:

• the amount within the limit is applied to reduce the tax base for income tax;
• the difference between the expenses incurred and the limit is reflected as a constant difference;
• Based on this amount, a permanent tax liability is formed.

We also suggest that you familiarize yourself with the selection of benefits that VHI insurance provides for legal entities .

What is VHI for a company?

VHI is one of the types of medical insurance, but it covers a much larger list of medical services than a regular medical policy, which is issued to every citizen of the Russian Federation under the compulsory medical insurance system (Article 927 of the Civil Code of the Russian Federation and Article 4 of the Law of the Russian Federation No. 4015-1 “On Organization insurance business in the Russian Federation" dated November 27, 1992).

In order for a company to include in its benefits the availability of a voluntary health insurance program for its employees, the organization enters into an agreement with an insurance company (one or more) for one or more health insurance programs.

According to the terms of insurance on the territory of the Russian Federation, the employing company is recognized as the policyholder, and the insurance company is recognized as the insurer. The agreement is concluded in the manner and according to the requirements specified in Chapter. 48 Civil Code of the Russian Federation.

Concluding an agreement with an insurance company implies that the employing organization will have an expense item related to employee wage costs. In this connection, questions may arise about the accounting of expenses and the taxation of profits (accounting for these expenses in expense items that affect the formation of taxable profit).

The principle of calculating contributions for voluntary health insurance

In general, the formula by which insurance premiums are calculated is as follows:

B = C / KD * DP, where

B – the amount of contributions for a certain tax period;

KD – number of days of validity of the insurance contract;

DP – number of days in the reporting period.

Calendar days are used in the calculation formula. Accordingly, CD = 366 for a leap year and 365 for a regular year. The DP parameter is taken equal to:

• 28 – in February of a non-leap year;
• 29 – in leap year February;
• 30 – in April, June, September, November;
• 31 – in January, March, May, July, August, October, December.

The amount obtained as a result of the calculation must be checked for compliance with the limit (6% of labor costs). Expenses to reduce the tax base for income tax can only be accepted in this amount.

Types of insurance

Let us immediately make a reservation that tax rules, especially in terms of income tax, strongly depend on the type of insurance that the employer decided to include in the “social package”.
So, there may be insurance in case of disability or death. In addition, the legislation provides for the possibility of insurance in case of temporary disability. However, these insurance options are rather exotic, which most accountants do not have to deal with. Most often, the social package includes voluntary health insurance policies, which give employees the opportunity to receive medical care in medical institutions accredited by the insurance company (clinics, hospitals, emergency rooms, sanatoriums, etc.). We will focus on this type of insurance.

Calculation examples

XXX LLC entered into a voluntary health insurance agreement from 03/01/2017 to 02/28/2018. The insurance premium is 450 thousand rubles, payable at a time. Labor costs amounted to:

• March 2021: RUB 615,248.37;
• April 2021: RUB 594,326.20;
• May 2021: RUB 602,145.85;
• June 2021: RUB 762,304.58;
• July 2021: RUB 612,419.54;
• August 2021: RUB 606,230.87;
• September 2021: RUB 795,364.02;
• October 2021: RUB 592,361.20;
• November 2021: RUB 601,005.43;
• December 2021: RUB 986,348.17;
• January 2021: RUB 550,316.94;
• February 2021: RUB 560,497.12

Calculation of insurance premiums for each month:

The maximum amount of costs for voluntary health insurance in March 2021 will be:

615,248.37 * 6% = 36,914.90 rub.

Insurance premiums exceed the permissible limit, therefore, the entire amount will be written off in accounting records, and only RUB 36,914.90 in tax records.

The difference is 38,219.18 – 36,914.90 = 1,304.28 rubles. will be attributed to permanent differences.

The permanent tax liability will be: 1,304.28 * 20% = 250.86 rubles.

In April 2021, the cumulative total of contributions will be equal to:

38,219.18 + 36,986.30 = 75,205.48 rub.

The maximum amount of expenses will be:

(615,248.37 + 594,326.20) * 6% = RUB 72,574.47

Since the limit has been exceeded, insurance costs will be written off as follows:

• within acceptable costs: 72,574.47 – 36,914.90 = 35,659.57 rubles;
• above the norm: 36,986.30 – 35,659.57 = 1,326.72 rubles;
• permanent tax liability: 1,326.72 * 20% = 265.35 rubles.

For subsequent months, calculations are made in a similar way.
To determine the allowable amount of costs for voluntary health insurance, the amount of labor costs is taken on an accrual basis from the start date of the contract until the end of the calendar year.

With the new year, the summation begins anew.

By the way, there is an article on the website that tells how employees will be able to use the VHI policy.

VHI under the simplified tax system “Income minus expenses”

When calculating tax under the simplified taxation system, the costs of voluntary health insurance are included in expenses. To do this, a number of conditions must be met:

• the validity period of the VHI agreement is at least 1 year;
• the possibility of voluntary health insurance, its procedure and conditions must be reflected in employment contracts with employees, as well as in the collective agreement;
• all insured persons must be employees of the enterprise that entered into the contract;
• The insurance company must have a license to carry out its activities, including voluntary health insurance. This requirement is contained in Federal Law No. 4015-1 of November 27, 1992 “On the organization of the insurance business in the Russian Federation” (clause 32);
• VHI costs do not exceed 6% of labor costs. This takes into account the total amount of costs for the entire enterprise (Letter of the Ministry of Finance No. 03-03-06/2/65 dated 06/04/2008). In other words, even if an employee is not insured, his salary is included in the calculation of the insurance limit. Costs above 6% do not reduce the tax base.

If all conditions are met, the expenses of an enterprise under the simplified taxation system are reduced, including by the amount of VHI expenses within the limit.

What do we write in the contract?

Let's start with the employment contract. It is clear that this condition must be enshrined in employment contracts with employees, but this can be done in different ways.

So, this may be a direct indication in the contract that the employer is obliged to insure the employee under the VHI program. Or there may be a link to a local regulatory act - Regulations on Social Guarantees, Internal Labor Regulations, etc., which contains a similar condition. Moreover, if the first option is chosen, then all the “particulars” (such as: from what moment insurance is provided, whether it is valid upon dismissal, transfer, transfer to another position, the scope of this insurance) must be recorded either also in the contract, or by reference to the corresponding local act.

You also need to clearly ensure that the list of insured persons coincides with the list of employees of the organization. After all, the expenses taken into account when taxing profits can only include those amounts that are paid under insurance contracts for persons who have a valid employment contract with the organization. Of course, paying for insurance for family members of employees or for persons with whom the organization has civil contracts is possible. But such expenses will not reduce the tax base for profits.

Expenses for voluntary health insurance: income tax

When calculating income tax, expenses for voluntary health insurance reduce the tax base.
The conditions for accepting expenses to determine the tax base are similar to those applied under the simplified tax system.

VHI contributions will be taken into account when calculating income tax even if the list of insured persons has changed during the term of the contract (Article 450 of the Civil Code of the Russian Federation).

For employees, it does not matter how long they have worked in the organization.

Even if this period is less than a year, a voluntary health insurance agreement is concluded in relation to this employee and the expenses incurred under it are accepted for tax accounting purposes.

Please note that in addition to the standard insurance program, companies also offer a deposit insurance program for VHI.

Accounting

In accounting, calculations for insurance premiums (contributions) for voluntary medical insurance are reflected in account 76-1 “Calculations for property and personal insurance” (Instructions for the chart of accounts).

Debit 76-1 Credit 51 – insurance premiums (contributions) for voluntary medical insurance have been paid.

The payment of the insurance premium does not affect the calculation of VAT, since insurance costs are not subject to this tax (subclause 7, clause 3, article 149 of the Tax Code of the Russian Federation).

Insurance expenses should be recognized in accounting from the date the insurance contract comes into force. If such a date is not provided for in the contract, then it is considered to have entered into force at the time of payment of the insurance premium. This follows from Article 957 of the Civil Code of the Russian Federation.

Costs for voluntary health insurance must be reflected in the cost accounts that reflected the salary of the insured employee.

Debit 20 (08, 23, 25, 26, 29, 44, 91-2...) Credit 76-1 – the cost of the insurance premium for the current month is expensed.

Debit 20 (08, 23, 25, 26, 29, 44, 91-2...) Credit 76-1 – the cost of the insurance premium under the insurance contract is expensed.

If the insurance contract is not valid from the first day of the month, calculate the amount of expenses to be written off in proportion to the number of remaining days of the month.

An example of how calculations under a voluntary health insurance agreement for employees are reflected in accounting

On January 21, 2021, Alpha LLC entered into a voluntary health insurance agreement for employees for a period of 365 days. The contract comes into force from the moment the insurance premium is paid. Payment of the insurance premium is provided in one payment. The insurance premium was paid on January 24, 2021 in the amount of RUB 90,000. The insurance is valid from January 24, 2021 to January 23, 2021.

The accounting policy of the organization for accounting purposes establishes that when determining the insurance premium for voluntary medical insurance of employees, which must be included in the expenses of the current month, the number of calendar days in each month is taken into account.

In accounting, expenses for voluntary health insurance amounted to:

In 2021:

• in January - 1973 rubles. (RUB 90,000: 365 days × 8 days);
• in February - 6904 rubles. (RUB 90,000: 365 days × 28 days);
• in March – 7644 rubles. (RUB 90,000: 365 days × 31 days);
• in April – 7397 rub. (90,000 rubles: 365 days × 30 days);
• in May – 7644 rubles. (RUB 90,000: 365 days × 31 days);
• in June – 7397 rub. (90,000 rubles: 365 days × 30 days);
• in July – 7644 rubles. (RUB 90,000: 365 days × 31 days);
• in August – 7644 rubles. (RUB 90,000: 365 days × 31 days);
• in September – 7397 rub. (90,000 rubles: 365 days × 30 days);
• in October – 7644 rubles. (RUB 90,000: 365 days × 31 days);
• in November – 7397 rub. (90,000 rubles: 365 days × 30 days);
• in December - 7644 rubles. (90,000 rubles: 365 days × 31 days).

In 2021:

• in January – 5671 rub. (90,000 rubles: 365 days × 23 days).

Alpha's accountant made the following entries.

Debit 76-1 Credit 51–90,000 rub. – the insurance premium for voluntary medical insurance of employees has been paid.

Debit 20 (08, 23, 25, 26, 29, 44, 91-2...) Credit 76-1– 1973 rub. – expenses for voluntary medical insurance of employees for January 2021 are taken into account.

The accountant made similar entries (for the corresponding amounts) at the end of each month until the expiration of the insurance contract.