Mandatory employee benefits in Costa Rica include health insurance through the social security system, accident insurance, pension, and paid leave. Supplemental employee benefits in Costa Rica include group life assurance, death-in-service schemes, and group dental. Costa Rica was in a state insurance monopoly for 84 years, the market opened to competition in 2002, and now there are 12 insurance companies. Costa Rica is an attractive location for foreign investment due to the sell -educated labor force, focus on English language instruction, geographic proximity to the United States, and attractive free trade zone incentives.
Carlos Castillo Paganella
In Costa Rica, 33% of the total premiums are property & casualty insurance, 36% personal insurance, and 31% compulsory insurance such as workers’ compensation insurance and SOA. Employee benefits account for US $67 million in insurance premiums and life insurance for US $112 million as of April 2023. Corporate voluntary (personal) medical insurance is the most desirable benefit. State-provided medical care is insufficient, and corporate insurance gives employees access to private medical clinics and hospitals. Most companies offer this benefit to attract and retain talent. As of April 2023, the insurance market grew by 6%, and Costa Rica’s currency appreciated by 7% in 2022.
Mandatory employee benefits
Costa Rica has five mandatory employee benefits:
- Compulsory health insurance – through the social security system with 29 public hospitals
- Accident insurance – covering accidents happening at work (during working hours)
- Pension insurance – funded through employers’ contributions to the State Pension Fund (I Pillar)
- Statutory leaves and allowances, annual leave, sick leave, maternity leave, parental leave
- Additional days off – additional days off for those who work on weekends or public holidays, or pay for this work must be doubled
Supplementary employee benefits
- Group Life Assurance / Death-in-Service Schemes – Many employers, primarily multinationals, would provide this benefit as it tends to be one of the most cost-effective, there is a 2% tax implication for the employee on the premiums, and it is of significant value as a protective measure should an employee pass away and leave their financial dependents burdened by debt or considerable loss of household income. The sum generally depends on the sector but could be a fixed amount or 1x to 3 x annual base salary. These schemes are established under trust, and the benefit can be paid quickly and outside of probate. The insured amount is usually in US dollars and includes coverage as advances for funeral expenses and in cases of grave illness.
- Group Medical – Private medical insurance is the most popular benefit. It can be paid partially or in full by the employer, and some include coverage for dependents and direct family. Employer-paid premiums are subject to 2% taxation. There are seven providers in the Costa Rican market, and plans require at least 5 employees. Coverage includes outpatient treatments, hospitalizations, maternity, preventive medicine, dental insurance, telemedicine, home visits, psychologist, and nutritionist.
- Group Dental – Dental insurance is available in Costa Rica. It is usually offered by companies who want to be in the 75 percentile of offerings and have a more attractive employee benefits program. Costs begin at US$ 7 per employee per month, and coverage is subject to benefit-in-kind taxation of 2%. Interest in this insurance has been slowly growing with domestic companies and is mainly offered to the manager level.
The most diverse employee benefits in Costa Rica are typical of the IT, tech, pharma, and medical devices, for example), where you should be able to offer a little more than others in your field to be an attractive employer.
Although the list of common perks in Costa Rica is quite long, the most popular ones are education and service awards (not to mention mobile phones and meal vouchers, which are taken now for granted).
- Mobile phones – many multinational companies provide mobile phones to all employees for business and private use
- Meal vouchers – many multinational companies provide meal allowances/vouchers for employees (~$150)
- Workplace Canteens – include catered lunches for employees; large employers often have an onsite cafeteria with discounted food prices
- Additional vacation – 5 extra days of vacation for employees with 5 years of tenure and 10 additional days for employees with 10 or more years of tenure
- Transportation – from home to the office
- Work from home – hybrid work; 2 days at the office and 3 days at home
- Gym memberships – popular with companies whose average employee age is under 30 (such companies sometimes prefer gym membership benefits to group medical insurance)
- Company cars – provided to all or some executives, senior managers, or employees who must travel a lot for work (e.g., sales representatives)
- Home rental – for CEO and ex-pats
- School allowances – for CEOs and ex-pats
Confia, Asinta’s employee benefits consulting partner in the country, provides this information about employee benefits in Costa Rica.