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Article | Global News Briefs

Argentina: New rule may affect employer healthcare benefits and costs

Health and Benefits|Total Rewards|Future of Work
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By Stella Sanyan | August 31, 2021

New legislation takes away certain employees’ ability to opt out of their industry’s compulsory health fund during the first year of employment.

Employer Action Code: Act

Employees normally receive medical care via membership in compulsory health funds (obras sociales). Unionized employees are usually assigned to a specific default obra social for their industry, but they have had the option to select a different one (e.g., one combined with additional insurance coverage arranged by the employer) from the start of employment. It is common for employers to offer a healthcare plan option that exceeds the basic obra social coverage, at least for certain categories of employees, with the compulsory employer and employee contributions for healthcare (6% and 3% of pay, respectively) used to help pay for that coverage. For new hire employees covered by a collective bargaining agreement (CBA), new legislation (Decree no. 438/2021) has eliminated the employees’ ability to opt out of the obra social for their industry during the first year of employment. The change was supported by the General Confederation of Labor as a way to help stabilize the funding of obras sociales, which are regulated by the Ministry of Health.

Key details

  • Employees covered by a CBA may change their assigned obra social only after one year of affiliation. During this time the compulsory healthcare contributions are designated only for the assigned obra social.
  • The change applies to employees starting a new employment contract on or after July 8, and to those already employed as of that date who did not have a pending request to change plans as of that date.

Employer implications

Most of the companies surveyed (around 80%) reported that their health plans are subject to CBAs. Affected companies can no longer, during the first year of employment, use the compulsory employee and employer contributions to help pay for medical plans other than their assigned obra social. As a result, such employers that have provided supplemental coverage will need to consider whether to continue to do during the first year of employment, at a significantly higher cost, or have employees not benefit from the supplemental coverage during this period. Another option for employers to consider would be scaling back the supplemental coverage during this period to mitigate the cost increase.

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