Croatia
[Updated 4/12/24] The number one employee benefit people in Croatia care about is personal accident cover, a long-standing customary benefit for employees in this country. It is closely followed by health insurance to supplement the national healthcare system, which often has long wait lists.
Country Insight
Average Cost
The average cost for employee benefits in Croatia for the employer is about €190 per year per employee.
Mandatory employee benefits in Croatia include pension and health insurance. Supplementary employee benefits in Croatia include retirement plans and health insurance. Voluntary benefits include travel health insurance, personal accident insurance, and life insurance. Employee perks include company cars, mobile phones, and performance-related bonuses.
Mandatory Employee Benefits in Croatia
Social security in the Republic of Croatia refers to organized protection for vulnerable groups within the population, such as the sick, elderly, those unfit for work, the unemployed, the socially endangered, and families with children. It is implemented by the state through contributions made on the principle of solidarity. Social insurance in Croatia consists of health, pension, unemployment, and work accident insurance, as well as maternity and family benefits.
Pension Insurance
Pension reform in Croatia was initiated in 1998, and in 2002, the three pension pillars were created. The first pillar is the generational solidarity system, the second is compulsory individual pension insurance, and the third is voluntary pension insurance. The last two pillars represent individual capitalized savings by the insured person. The institution charged with the organization and implementation of the pension insurance system is the Croatian Institute for Pension Insurance (HZMO), a public institution.
The second pillar, which is in addition to the first pillar, was compulsory for people under 40 in 2002. People between 40 and 50 in 2002 were able to opt-out. Those who did, as well as people older than 50 in 2002, remained insured only under the first pillar, but their contribution equals 20% of gross salary, thus ensuring equality.
For those insured under both pillars, the extra 5% of the total contribution (in addition to the 15% paid under the first pillar) is directed to the second pillar funds (a private pension fund).
Health Insurance
Basic health insurance in Croatia is compulsory for all citizens with permanent residence in Croatia and foreign nationals with permanent residence status.
Compulsory primary health insurance ensures rights and obligations arising from basic health insurance according to the principle of mutuality and solidarity. It is administered and carried out by the Croatian Institute for Health Insurance (HZZO).
Employers must pay contributions towards basic state health insurance and basic accident insurance (16,5% on the gross salary, so-called “gross II salary” or total cost for the employer). Self-employed workers in Croatia are also obligated to pay health insurance contributions. Unemployed persons, children, retired, and vulnerable persons benefit from basic health insurance without having to pay the contribution.
Basic health insurance covers costs of general and urgent healthcare services and examinations, treatment in case of workplace injury and profession-related illness, compensation for loss of pay during sick leave, maternity or paternity leave, and transport costs linked to the use of health services. The Act and Law define who the users are and which rights they have according to the Law. The insured has several rights, which include primary health care, specialized health care, hospital care, the right to medications, dental, orthopedic, and other aids, and the right to protection in other EU Member States. The Croatian Institute for Health Insurance has defined what services are fully paid from the fund of compulsory insurance. Among other rights, it includes the overall health care of children up to age 18, preventive and specific health care of school children and students, preventive health care for women, monitoring of pregnancy and childbirth, the costs of dialysis treatment, transplantation of human organs, ambulance, nursing health care, medication from the basic list of prescription medications and laboratory diagnostics. There are medical procedures that are not included, such as cosmetic surgery, experimental treatment, the treatment of acquired voluntary sterility, surgical treatment of obesity, and similar treatments. Persons who are temporarily unable to work are also insured through compulsory insurance. Services that are not covered by basic health insurance are borne by the individual or are covered by voluntary health insurance.
Supplementary Employee Benefits
Retirement
Voluntary pension insurance (third pillar) is based on individual capitalized savings for those who want more insurance against the risks of old age, disability, and death. Open to all citizens since March 2002; the third pillar allows every person residing in Croatia to be insured. There are few Voluntary Funds in Croatia.
Through membership in a voluntary pension fund, a member is offered the possibility that the voluntary pension savings are paid for him by the employer. All the payments of the employer into the third pillar of the pension insurance are not considered as a salary up to the amount of €67.00 per month i.e., up to €804.00 annually, and the same is a tax-recognized expenditure, i.e., expense for the employer.
The Republic of Croatia encourages pension savings, i.e., voluntary pension savings, and grants incentives to all members of the third pillar. The state incentive funds amount to 15% of the paid contribution of a member of the Fund in the previous calendar year, but at the most up to the amount of €99.54 by a member of the Fund. The maximum amount of the state incentive funds is realized by the annual payment of €663.61. All who pay less than €663.61 will realize the right to 15% of the payment, and those who pay more than €663.61 during the year will realize the right to the maximum amount of €99.54.
Companies usually do not supplement retirement benefits, i.e., there are no company-wide pension plans. Employer third-pillar contributions are currently optional and not very common, and they may be more inherent among higher-ranking employees (only 8% of all companies provide this benefit).
Healthcare
Voluntary health insurance in practice may be supplementary or additional health insurance. While compulsory health insurance is provided by the HZZO, voluntary health insurance is carried out by insurance companies, which have received permission from HANFA (Croatian Financial Services Supervisory Agency) to implement and carry out this kind of insurance. One of the conditions for being able to agree on a voluntary insurance policy in voluntary health insurance is that the person is registered in compulsory health insurance.
Supplementary health insurance is the insurance that provides coverage of part of expenses up to the full cost of health care of compulsory insurance (coverage for participation costs). It covers all types of additional payments regarding the basic health insurance in all healthcare institutions, including, without limitation, primary health care, specialist examinations, diagnostics, laboratory tests, physical therapy, dental medicine services, hospital treatment, and prescription medication. It is implemented by the Croatian Health Insurance and the insurance companies in Croatia.
Additional voluntary insurance for a wider range of benefits or a higher standard of service provided under compulsory insurance, and for additional rights not covered by compulsory insurance.
It is a form of voluntary additional health insurance provided by private insurers, contributing a monthly insurance premium, and includes preventive medical check-ups and indicated specialist examinations, control examinations, diagnostic and laboratory tests after preventive medical check-ups, including higher quality and faster health service by specialists. The scope of coverage depends on the type of specific insurer’s program.
From January 1, 2024, voluntary health insurance (including supplementary and additional health insurance) is non-taxable for employers up to €500.00 per year per employee. The only condition is that the employer concludes policies for his employees, and it is not necessary to conclude policies for all employees in order to have tax incentives.
Company-wide medical benefits are not typical but are sometimes offered for management and professional staff in the course of additional (voluntary) healthcare, and the most common benefit is medical check-ups, including higher quality and faster health service by specialists. Some companies (mostly multinational) also insure family members of executives.
Voluntary Benefits
Other voluntary benefits are available as insurance products in the market.
- Travel health insurance — Covers costs of medical treatments during travel and stay abroad (76% of all companies provide this benefit).
- Personal accident insurance —The most common are group personal accident insurance policies on 24 hours basis or so-called “Manager´s accident” with higher sums insured. The main coverages are death due to accident and permanent disability. All other coverages (e.g., death due to illness, death due to traffic accidents, bone breakage, daily home or hospital allowance, therapy expenses, etc.) are optional.
- Life insurance — Can be with or without savings and investment components. A basic life insurance policy consists of a defined sum insured that is payable in case of the death of the insured person. In addition to life insurance, supplemental insurance against personal accidents may also be arranged (such that result in permanent disability, daily hospital treatment costs, or death caused by an accident), as well as supplemental insurance against severe illness.
Life insurance with a saving component has also been not taxable for insureds/beneficiaries since January 1, 2020.
In general, life insurance policies are not very common insurance-based benefits, except maybe for higher-ranking employees.
Employee Perks
The most popular perks for Croats are company cars, mobile phones with part or all costs covered by employers, performance-related bonuses, and occasional gifts at Christmas and Easter, given either as cash, company products, or shopping coupons, as well as professional training.
The structure of compensation packages depends on employees’ positions and net salary:
- Senior managers almost always expect round-the-clock use of company cars, mobile phones with business-related expenses paid by the company, performance-related bonuses, and professional education.
- Middle and lower managers, depending on the position (for example, a sales representative would have a different package from an IT system administrator), expect to be able to use company cars during working hours and some kind of performance-related bonus, primarily if their work is directly related to profit margins.
- Any additional education paid for by organizations, from foreign language classes to MBAs, is seen as a great benefit. For junior employees, it is a good sign that a company wants to invest in them and their future.
Typically, companies provide tax-free transportation allowances; most collective agreements cover public transportation for workers. Also, some bigger companies, especially production-oriented companies, provide canteens open to all employees.
There are no other expected benefits on the business market, except maybe housing allowances for expatriates and employee loans provided by banks or larger international companies. Only 1% of companies offer flexible benefits.
Related Government Websites
- Ministry of Health
- Croatian Health Insurance Fund
- Tax Administration
- Ministry of Labor and Pension System
- Ministry of Finance
- Croatian Pension Insurance Institute
This information about mandatory and supplemental employee benefits in Croatia comes from Asinta’s Central and Eastern European Partner, the GrECo Group.