Premium Reduction

The Agreement on the Free Movement of Persons between Switzerland and the European Union (EU) provides coordination of Social Security according to the regulations established in the EU, so the free movement of persons is not encumbered by limiting regulations of Social Security. Therefore, certain person subgroups have to be newly included into Swiss health insurance. On the other hand, people insured under Swiss health insurance receive better cover for medical treatment abroad. Persons who live in any EU member country but work in Switzerland must insure themselves and their non-active family members in Switzerland.

The same principle applies for pensioners who have spent their whole working life in Switzerland and want to retire in an EU member country. Depending on the resident country there might be exceptions which make it possible to be insured in the resident country. Compulsory health insurance in Switzerland also applies for non-active family members of the mentioned pensioners as well as non-active family members of EU citizens who work and live in Switzerland. In these categories there might be exceptions as well.

This entails necessary premium reduction procedures for people who can be, or have to be, registered under Swiss health insurance. Consequently a procedure had to be developed by the Swiss Cantons responsible for frontier workers and their non-active family members who are insured in Switzerland. The Federal procedure for pensioners entitled to premium reduction is conducted by the Gemeinsame Einrichtung KVG (Common Institution under the Fed. Health Insurance Act). (see following implementations)

For persons who do not actually have any connection factor to Switzerland (Pensioners) premium reduction is implemented by the Gemeinsame Einrichtung KVG (Common Institution under the Fed. Health Insurance Act) by order of the Swiss Confederation, according to the “Regulation on Premium Reduction in Health Insurance for pensioners who live in an EC member country or in Island or in Norvegian”.

History and Fundamental Idea of Premium Reduction

The Federal Counsel intends to keep the financial burden of health insurance on a reasonable level by using premium reduction (introduced 1996). The subsidation of health insurance premiums has, therefore, been newly regulated: The scheme concerning a general reduction of insurance premiums has been displaced by individual premium reduction, which should disburden specifically persons and families that live in narrow economic circumstances.

Premium Reduction in Connection with the Agreement on the Free Movement of Persons

There are certain categories of people who are health insured in Switzerland but do not live there, live in narrow economical circumstances and, therefore, are entitled to premium reduction.

Premium reduction is an integrating part of the present financing scheme for the compulsory health insurance. Compulsory health insurance also has to be affordable for people who live in narrow economical circumstances even if they are insured in Switzerland but live in an EU member country. The Swiss Cantons conduct premium reduction for residents abroad which have a current connection factor to a certain Canton (e.g. frontier workers). The Cantons are assisted by the Gemeinsame Einrichtung KVG (Common Institution under the Fed. Health Insurance Act) which is in charge of premium reduction for persons who do not have a current connection factor to any Swiss Canton (e.g. pensioners living in EU member countries). This socio-political measure accords to the basic principle of individual premium reduction as it is already handled by Swiss Cantons.

Premium reduction will be granted to pensioners (in narrow economical circumstances) who are residents in any EU member country and health insured in Switzerland if they fulfil all of the following requirements:

Requirements

Payment

The financial contributions are paid directly to the Swiss health insurer by the Gemeinsame Einrichtung KVG (Common Institution under the Fed. Health Insurance Act). Premium reduction is the effect of this payment. The health insurer will reduce the premiums retroactively to the beginning of the Swiss insurance by the corresponding amount.

Direct payments to the insured are not possible. Premium reduction has to be applied for annually.

Calculation Example 2008

Resident in United Kingdom, single

Assets	20'000	CHF
Income resulting from AHV/IV pensions	21'600.00	CHF
Career Provision Pension (BVG pension)	20'400.00	CHF
Total Income	42'000.00	CHF
Adaptation of the income according to buying power (factor 100/83)	50'602.41	CHF
a) authoritative average premium CHF 415.00 x 12	4'980.00	CHF
b) maximum annually premium charge 6 %	3'037.45	CHF
Premium reduction per year (Difference)	1'942.55	CHF
Premium reduction per month (rounded)	162.00	CHF
(As the main assets do not exceed CHF100’000 the claim is justified.)