Introduction
In Taiwan, employers are required by law to enroll employees in Labor Insurance (LI) and National Health Insurance (NHI). These programs provide vital protections, including healthcare and income replacement in case of illness, injury, or retirement. This guide outlines the key responsibilities of employers, the consequences of non-compliance, and why meeting these obligations is essential.
Key Responsibilities of Employers in Taiwan's Insurance Systems
Employers must ensure that employees are enrolled in both Labor Insurance (LI) and National Health Insurance (NHI) to provide essential protection. These programs safeguard workers’ health, offer income replacement, and cover medical expenses. Below are the main responsibilities employers must understand.
1. What is Labor Insurance (LI)?
- Labor Insurance provides coverage for work-related injuries, illnesses, unemployment, and retirement. It includes medical benefits, income replacement, and pensions.
- Employers must enroll employees from the first day of employment and contribute to premiums based on the employee’s salary. While employees contribute approximately 20% of the premium, employers are responsible for paying the majority, around 70%, with the government covering the remaining 10%.
2. What is National Health Insurance (NHI)?
- National Health Insurance covers medical expenses for all residents of Taiwan, including employees, for services like doctor visits, hospital stays, surgeries, and medications.
- Employers must ensure employees are enrolled and share the cost of premiums, which are income-based. Premiums are typically deducted directly from employees’ salaries.
3. Who Needs to Be Enrolled?
- Full-time Employees: Must be enrolled in both Labor Insurance (LI) and National Health Insurance (NHI) from the very first day of employment.
- Part-time Employees: Part-time employees who work a minimum number of hours or earn a specific income also need to be enrolled in both insurance programs. Employers must assess part-time workers to determine their eligibility.
- Foreign Workers: Foreign workers are entitled to the same benefits under both Labor Insurance (LI) and National Health Insurance (NHI). Employers must ensure that foreign employees are properly enrolled, just as they would for local employees.
4. Employer’s Payment Responsibilities
- Labor Insurance Premiums: Employers must contribute to Labor Insurance (LI) premiums, which are based on employees’ monthly salary. Employers are responsible for the majority of the contribution, while employees contribute a smaller portion through payroll deductions.
- National Health Insurance Premiums: Employers are also responsible for paying a portion of the National Health Insurance (NHI) premiums, which are split between the employer and the employee. The premium is calculated according to the employee’s income, and the employer must deduct the employee’s share from their salary.
Consequences of Non-Compliance & Why It’s Important
Failing to comply with these insurance requirements can lead to significant consequences, both financially and legally. It’s important for employers to understand the risks of non-compliance and the importance of meeting these obligations.
What Happens if Employers Don’t Comply?
- Fines and Penalties:
Employers who fail to enroll employees in LI or NHI, or who do not make timely premium payments, will face fines under the Labor Insurance Act and National Health Insurance Act. Penalties include:
- NT$30,000 to NT$150,000 for failing to enroll an employee in either LI or NHI.
- NT$20,000 to NT$100,000 for late premium payments.
- Repeated violations may lead to escalated fines, increasing as the number of offenses rises.
- Liability for Medical Costs: If an employee is not enrolled in insurance and suffers an injury or illness, the employer may be held financially responsible for covering medical expenses. This includes hospital bills, medical treatments, and other related costs. Employers who fail to comply with enrollment regulations expose themselves to this significant financial risk.
- Back Premiums and Interest: Employers who fail to pay premiums on time or neglect to enroll employees may be required to pay back premiums, plus up to 1% monthly interest. Additional penalties for late payments can substantially increase the financial burden on employers.
Special Considerations for Foreign and Part-Time Workers
- Foreign Workers: Employers must ensure that foreign employees are enrolled in both Labor Insurance (LI) and National Health Insurance (NHI). Foreign workers are entitled to the same benefits as local employees, with few exceptions. One exception is that foreign workers on contracts shorter than three months may not be eligible for NHI coverage, though they still must be covered by LI.
- Part-time Employees: Employers are responsible for evaluating part-time employees’ eligibility for both insurance programs. Part-time workers who meet the criteria (e.g., minimum working hours or income level) must be enrolled. It’s essential for employers to keep track of part-time workers’ eligibility to avoid potential fines.
Why Compliance is Crucial
Compliance with insurance regulations is essential not only to avoid penalties but also to create a positive and supportive work environment. Here’s why meeting these obligations is vital:
- Avoid Legal and Financial Risks: Compliance helps avoid fines and liability for uninsured medical costs.
- Employee Protection: Enrolling employees in Labor Insurance (LI) and National Health Insurance (NHI) ensures coverage for illness, injury, or retirement.
- Supportive Work Environment: Fulfilling insurance obligations improves employee morale, productivity, and retention.
- Demonstrating Corporate Responsibility: Compliance builds trust, enhances the company’s reputation, and attracts talent and clients, supporting long-term success.
Conclusion
Employers in Taiwan are legally required to enroll all employees—whether full-time, part-time, or foreign workers—in Labor Insurance (LI) and National Health Insurance (NHI). By meeting these obligations, employers ensure their workforce is protected in case of illness, injury, or retirement. Non-compliance can result in fines, penalties, and the risk of being held responsible for medical expenses. By staying informed, regularly assessing employee eligibility, and ensuring timely premium payments, employers can create a lawful, supportive, and sustainable work environment that benefits both employees and the business.
