The Swedish Government withdraws its proposal regarding “Health Exchange”

In the forthcoming autumn budget bill, the Government will withdraw its much-criticised proposal that employers should pay a larger portion of the costs for long-term absence due to illness. Instead, the Government will assess the proposals, which the labour market parties have presented to reduce the overall cost of absence due to illness.

On 23 August, the Minister of Health and Social Affairs, Annika Strandhäll, announced that the Government is withdrawing its proposal regarding ”Health Exchange”, that is the co-financing of health insurance. As we previously wrote in Tax matters, employers, according to the proposal, were to account for 25 percent of sickness pay for employees written off sick during a period of more than 90 days. The idea was that the employers would be more motivated to work to keep their personnel healthy if this was the case.

The proposal was met with strong opposition from both the unions and employers and has been referred to by certain parties as “the sick tax”. In addition to the criticism from the companies that this would cost too much and that absence due to illness can be caused by factors other than the work place, there were also concerns that the proposal would make it more difficult for employees who had previously been off sick to obtain employment.

Now the Government is putting its proposal for Health Exchange on ice to the benefit of the solutions proposed by the interested parties. The Swedish Trade Union Confederation (LO), the Swedish Federation of Salaried Employees in Industry and Services (PTK) and the Confederation of Swedish Enterprise have presented their own proposals intended to lead to reduced absence due to illness and lower health care costs.

If these proposals will be sufficient or if the Government will revert in the future with new proposals is something that remains to be seen. At PwC, we will continue to monitor all types of tax issues including this important area.

Author: Karin Norberg, former employee at PwC.