Health insurance

Attention, management board members

Kristel Tiits Kristel Tiits

Beginning with 2016 1st of January, some important changes to the health insurance system took force, and thus those serving as management board members and working on the basis of contracts under the law of obligations (authorisation agreements, contracts for services etc) should pay attention to the issues relating to activation and suspension of health insurance coverage.

Under the rules in force to this point, the requirement for receiving health insurance coverage for people whose employment is governed by contracts under the law of obligations was that they had to have a contract with a duration over one month or an agreement for an unspecified term and the social tax payable on a person had to amount to at least the minimum social tax obligation per month (355 euros in 2015). The insurance coverage arose after registration in the employment register and after a 14-calendar-day waiting period after the making of the entry. The insurance coverage ceased two months after failure to pay social tax by the due date.

The same conditions also applied to the members of management and supervisory bodies of legal persons, with the exception of the term of the contract. In other words, the term for which the member of the management board held the position was not a requirement for enjoying insurance coverage.

Health insurance now depends on filing of the monthly income and social tax declaration

Under the new system, the activation and deactivation of health insurance coverage for members of companies’ management and supervisory board members and people working on the basis of contracts under the law of obligations is linked to the filing of the monthly income and social tax declaration (abbreviated TSD) to the Tax and Customs Board. Similarly to the previous system, the minimum social tax obligation (390 euros a month in 2016) had to be fulfilled.

Thus the insurance coverage for the aforementioned persons becomes active as of the filing of the social tax declaration for the given person, i.e. the insurance coverage begins only after the declaration is filed. Under clause 9 (1) 4) of the Social Tax Act, the social tax payer must transfer the social tax payable to the Tax and Customs Board bank account by the 10th day of the month following the taxation period and, by the same date, file the corresponding tax declaration with the Tax and Customs Board.

Thus, in the case of the contractual relationships referred to above, receiving health insurance coverage is not just related to registration in the employment register or the length of the term of the contract; the primary condition instead is declaration and payment of social tax.

A few examples:

  • an authorisation agreement is entered into on 1 April and the payment is made on 30 April. The TSD is filed to the Tax and Customs Board on 10 May. Thus the person enjoys coverage from 11 May to 10 June – the coverage starts the day after the TSD is filed.
  • an authorisation agreement is entered into on 5 April and remuneration is paid to the person on 5 May. The TSD is filed to the Tax and Customs Board on 10 June. The person starts enjoying health insurance coverage from 11 June and it is in force until 10 July – the coverage starts the day after the TSD is filed.
  • if a person works for multiple employers on the basis of multiple authorisation agreements and the sum of the remuneration under the agreements is enough to meet the minimum social tax requirement, the health insurance coverage arises only if all of the these TSDs were filed by the due date.

It is important to note that if the declaration was not filed by the due date or if the filing of one declaration (in the case that multiple agreements are needed to reach the social tax minimum) is delayed or not filed on time, the person’s health insurance coverage comes to a halt. The person violating the obligation – the person who failed to file the declaration on time – is liable for losses in connection with the suspension of health insurance coverage.

The suspended insurance coverage resumes the next day after receipt of data substantiating that the minimum social tax obligation declared to the Tax and Customs Board was met, pursuant to subsection 8 (4) of the Health Insurance Act.