Social security contribution to replace former individual contributions
According to the new Social Security Act*, a unified new contribution named social security contribution shall be created by the merger of the contributions accustomed to so far, including: pension contribution (10%),health insurance contributions (7%),and labour market contribution (1.5%). The rate thereof will not change: it will remain 18.5% as earlier.
However, pension contribution should not be completely forgotten about, either, which shall survive in the following cases:
- persons receiving childcare benefit, provisions to assist childcare, child raising support, benefit to take care of children at home, and nursing fee,
- persons receiving employment benefit for development,
- persons receiving job seeking allowance after being provided for,
- persons receiving rehabilitation benefit (after 01.01.2012.),
- persons receiving law enforcement health impairment wage supplement, law enforcement health impairment allowance, national defence health impairment wage supplement, and national defence health impairment allowance,
- in case of work performed by members, after the monetary benefit received in consideration for the activities performed by a social cooperative society member,
- and in an ecclesiastic service relationship in case of a clergyman.
In case of the allowances and emoluments included in the list, only the 10 per cent pension contribution is required to be paid henceforward as well.
The impact of this aggregated contribution is that in case of legal relationships not subject to labour market contribution, it is required to be paid after 01.07.2020; parallelly, however, parties concerned shall be entitled to job seeking allowance.
A substantial change is the scope of persons pursuing supplementary activities**, since they are not considered to be insured, thereby they are not encumbered by the obligation of social security contribution payment – they only need to pay the 15 per cent PIT. In their case, the social contribution tax does not need to be paid, either.
Based on these regulations, a further group of pensioners on their own right shall be exempted from contributions; parallelly, however, they will cease to be entitled to health insurance benefits.
Minimum contribution payment in case of an employment relationship
Another new element is the introduction of minimum contribution payment, adjusted to the minimum wage. The social security contribution base of a person employed – as per Section 6 (1) a) of the new Social Security Act – shall be at least 30 per cent of the minimum wage per month (this sum is HUF 48,300 per month in 2020).
On the other hand, attention should be paid to the fact that if the person insured receives sick leave payment, accidental sick leave payment, childcare sick leave payment, or such person’s insurance is suspended in any other case, then such periods shall not be included in the calculation of the contribution payment limit. Furthermore, such number of calendar days may not be taken into consideration, either, when the insurance relationship did not exist (in case of entry or leave during a month); in such a case, the calculation of the lower limit of contribution payment shall not be examined on a monthly basis, but taken as one thirtieth part of the contribution base per calendar day.
The lower limit of contribution payment is not required to bed applied if the person employed:
- receives any nursing fee, childcare benefit, provisions to assist childcare, child raising support, benefit to take care of children at home, and adoption benefit;
- is a student pursuing studies at a regular course of vocational studies at a vocational training institution as per the Act on Vocational Training, in the framework of regular school training or a regular training mode at a public education institution, and at a regular course of study in a higher education institution.
Healthcare services contribution – payable in case of non-insured persons
Non-insured residents (Section 5) and those who are not entitled on any other title, either, to receive healthcare services, are required to pay a health insurance service contribution. Thereby they will be entitled to healthcare services in Hungary. The amount of health insurance services contribution is HUF 7,710 / month (HUF 257 / day) in 2020.
Those who are not insured and do not pay any health insurance service contribution, either, shall not be insured. In such a case, they shall be given a “red-light” warning on occasion of a legal relationship inspection. As from 01 July 2020, those individuals who do not pay any health insurance service contribution and accumulate arrears of six months, shall not be entitled to healthcare services free of charge. This means that – as from 01 July 2020 – it shall not be possible any longer to settle the legal relationship subsequently by paying the health insurance service contribution in arrears, so the patient – if provided care, shall be required to pay for the service. Emergency care shall not be refused, as earlier.
In the emergency situation caused by the coronavirus epidemics, many employees were forced to take an unpaid leave. In the event that they were not insured under any other title (infant care – CSED, childcare benefit – GYED, childcare allowance – GYES) during such period, they shall be required to pay the health insurance service contribution. As from 01 May 2020, the employer shall be required to determine, report, and pay the healthcare service contribution after employees on unpaid leave. The employer can do this retroactively as well, being allowed to pay the employee’s healthcare service contribution until the 60th day following the termination of the emergency situation.
In the emergency situation, the duration of several allowances has been changed: childcare benefit (GYED); childcare allowance (GYES),and child raising support (GYET). Pursuant to Government Decree 59/2020 (III. 23.) those allowances that would have expired on or after11 March 2020 were extended. Such period of prolonged case shall expire upon the termination of the emergency situation; any allowances extended during such period shall be discontinued as of 30 June 2020. If an allowance expired basically after the termination of the emergency period, the employee concerned shall not be entitled any longer to extended allowance.