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Sickness insurance

 
photo:  (sxc.hu)
 

Sickness insurance is paid to provide for situations when an adult in temporarily incapable of work due to sickness, pregnancy, maternal responsibilities, or when the adult must take care of his/her family member, etc. In these situations, the adult receives sickness benefits.

 
 

Sickness insurance is paid to provide for situations when an adult in temporarily incapable of work due to sickness, pregnancy, maternal responsibilities, or when the adult must take care of his/her family member etc. In these situations, the adult receives sickness benefits. Participation in the sickness insurance system is mandatory for both Czech citizens and foreign nationals. Foreign nationals are required to pay sickness insurance premiums regardless of whether their residence in the Czech Republic is permanent or temporary. This document explains how the premiums are calculated and paid under various types of employment.

Sickness insurance premiums must be paid by persons carrying out work within labor relations established under Czech legal rules and regulations, e.g. under the Labor Code or the Commercial Code, and from January 1, 2004, also persons carrying out work for an employer who has a registered office in a state with whom the Czech Republic concluded the international social security agreement.

Who is not required to pay sickness insurance premiums

  • foreign nationals not residing in the Czech Republic permanently and working here for employers enjoying diplomatic privileges and immunities,

  • foreigners that may be or are sickness insurance policyholders in another state

  • employees working in the Czech Republic for an employer that does not have its registered office in the Czech Republic; however, this is not valid for employees carrying out work for an employer who has a registered office in a state with whom the Czech Republic concluded the international social security agreement,

  • employees carrying out only occasional work (occasional employment is deemed to be an occasional single employment that should not have lasted and did not last for more than seven consecutive calendar days or employment of limited scope, i.e. employment under which the assessable income does not exceed CZK 400 in a calendar month) (under Section 5 and Section 6 of Act No. 54/1956 Coll., on Employee Sickness Insurance, as amended).

Note:

Individuals participating in the sickness insurance system must also pay pension insurance premiums and contributions to the state’s unemployment policy, regardless of their residence status or citizenship.

Note:

Self-employers may participate in the sickness insurance system voluntarily (foreign nationals staying in the Czech Republic on a residence visa for over 90 days for business purposes ); however, foreign nationals must, when applying for an extension of their visa, present a certificate by a Czech finance office confirming the full payment of taxes and a certificate by the Czech Social Security Administration Authority confirming the full payment of the social insurance for the last period.

The commencement and termination of insurance

Under the law (see link), the insurance period starts on the first day of employment that gives rise to participation in the sickness insurance system. The insurance period ends on the last day of the employment giving rise to participation in the sickness insurance system (the first sentence of Section 8, Act No. 54/1956 Coll.).

Note:

In the case of an employee employed within labor relations established under foreign legal regulations, the insurance period starts January 1, 2004, if they started to work before that date. But this is not valid in the case when the sickness insurance of the employee, who is employed within labor relations established under foreign legal regulations, commenced prior to January 1, 2004 (point 4, Act No. 424/2003 Coll.).


The rates and payment of sickness insurance premiums payable by employees

The amount of the premium is calculated as a percentage rate of the assessment base, which in the case of employees amounts to 8% (of which 6.5% is the pension insurance; 0.4% is the contribution to the state’s unemployment policy and 1.1% is the sickness insurance premium ) of the assessment base.

The assessment base of an employee is the sum of the following items:

  • income from employment +
  • compensation for the employee’s costs incurred to carry out work +
  • damages paid by the employer +
  • special bonuses +
  • wage compensations +
  • wage compensations paid for the period before the employee participated in the sickness insurance system +
  • bonuses for work availability.
 

Payment of premiums by employees (incl. employees under an agreement on work activity):

The payments must be calculated and made by the employer on the employee’s behalf. The employer pays two-thirds itself and withholds one-third of the premium from the employee’s gross salary.

Organizations and small organizations (i.e. individuals or legal entities providing work to employees) must pay the premiums that must be paid by the employee from his/her own income to the account of the Czech Social Security Administration. The organization or small organization will withhold the premiums paid on the employee’s behalf from the employee’s wage. In the case that the employee generated assessable income in a calendar month, but that income does not allow for withholdings as it does not have the form of a monetary payment, the organization or small organization will withhold premiums from the monetary income generated by the employee in the next calendar months (under Section 8(1) of Act No. 589/1992 Coll., on Social Security Premiums and Contributions to the State’s Unemployment Policy, as amended.).

 

The rates and payment of sickness insurance premiums payable by self-employers

The amount of premium advance payments is calculated as a percentage rate of the monthly assessment base, which amounts to 29.6% of the monthly assessment base (of which 26% is the pension insurance premium, 3.6% is the contribution to the state’s unemployment policy and 4.4% is the sickness insurance premium ).

For information on the exact amount of the assessment base, address the competent district  Social Security Administration office. If a self-employer carried out independent economic activity in the previous calendar year, the monthly assessment base amounts to at least 35% of the average income after the deduction of the expenses incurred to generate, secure and sustain the income generated in each month of the previous year in which at least some activity was carried out; however, the monthly assessment base may not exceed the amount of CZK 40,500 (Section 14 (2) of Act No. 589/1992, Coll.).

Self-employers (and persons deemed to be self-employers under the Act on Social Security) must credit the advance payments of pension insurance premiums, contributions to the state’s unemployment policy and the payments of sickness insurance premiums, for each calendar month, with the account of the local district Social Security Administration office (the local competence of a district Social Security Administration office is governed by the permanent residence address of the self-employer; if the self-employer does not have a permanent residence in the Czech Republic, local competences are governed by his/her business establishment).

Premium advances are payable from the first day of the calendar month to the eighth day of the following calendar month.

Note:

When applying for an extension of his/her residency visa for over 90 days granted for business purposes, a foreigner must present a certificate by a Czech finance office confirming the full payment of income taxes for the last taxable period and a certificate by the Czech Social Security Administration Authority confirming the full payment of the social insurance for the last period (Section 33(5) of Act No. 326/1999 Coll., on the Residence of Foreigners in the Czech Republic, as amended).

Sickness insurance of employees under an agreement on work activity

Employees employed under an agreement on work activity participate in the sickness insurance system unless the agreement has the nature of an occasional single employment that is not arranged indefinitely and has not lasted for a period of seven consecutive calendar days. Employees employed under an agreement on work activity are insured (against sickness) in those calendar months during which their assessable income amounted to at least CZK 400 (pursuant to Section 68–69 of Directive No. 165/1979 Coll., on sickness insurance of specific employee groups and on sickness benefits provided to citizens in special cases).


Sickness benefits

Four types of benefits are provided under the sickness insurance system:

  • sickness benefits,
  • assistance in taking care of a family member,
  • compensation benefits during pregnancy and maternity,
  • monetary aid during maternity.

The following two benefits are provided to self-employers:

  • sickness benefits,

  • monetary aid during maternity.

Legislation

Act No. 54/1956 Coll., about employee sickness insurance, as amended

Act No. 424/2003 Coll., which changed Act No. 582/1991 Sb. and some other acts

Act No. 421/2003 Coll., which changed Act No. 54/1956 Coll., about employee sickness insurance, as amended

Act No. 589/1992 Coll., about social security insurence and allowance for state employment policy, as amended

Act No. 326/1999 Coll., about foreign residency in the Czech Republic, as amended

Regulation No. 165/1979 Coll., about sickness insurance of some employee and about sickness benefits in special cases

Payment of sickness insurance premiums by self-employers (incl. persons employed under a contract on work or agreement on work activity):

Links

 
Author:
 
Added: 09.01.2010
 
 
 

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