If you don’t pay your health or social insurance, you incur a debt, which is compounded by a penalty every day. The insurance company or the Czech Social Security Administration can collect the debt and, in extreme cases, it can end in execution. So how exactly does it work if a self-employed person does not pay insurance and what if your employer does not pay insurance?
Non-payment of health or social insurance leads to debt.
The debt is compounded daily by a statutory penalty.
The debt is collected by the health insurance company or the Czech Social Security Administration.
If you do not address the debt, it can be enforced.
The situation can be resolved by paying the debt or by agreeing a repayment plan.
If you have already incurred a health or social insurance debt and do not know how to proceed, we recommend that you consult an attorney. We can help you determine the true amount of the debt and suggest the best way to resolve it.
Public health insurance is used to pay for the health care of the insured. It is compulsory for all citizens of the Czech Republic from birth until death. This does not mean that everyone pays for it out of their own pocket. The state pays for a large part of the population. The amount of health insurance is determined on the basis of the minimum assessment base(minimum wage) or the average wage of the national economy. Different groups therefore pay different amounts. It depends on whether you are an employee, self-employed or have no taxable income.
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Social security contributions are made up of three components: sickness insurance, pension insurance and a contribution to state employment policy. Its main purpose is to provide support in unfavourable social situations and to pay old-age pensions, which form the bulk of the social security system. The amount you have to pay for social insurance is determined as a multiple of the percentage rate and the assessment base. The assessment base for social insurance varies depending on whether you are an employee, employer, self-employed or self-payer.
Self-employed activity involves a certain amount of administrative burden in the form of levies and payments for self-employed persons. What does all this entail and when is a flat-rate regime worthwhile instead? This is the focus of our next article.
As we have already written, everyone has to pay health insurance. However, not everyone pays it directly. The state pays for some groups of people. These include dependent children, pensioners, women on maternity leave, people on parental leave, recipients of parental allowance, people registered with the Labour Office as jobseekers, people receiving material hardship benefits, people dependent on and caring for another person from the second degree of dependence onwards, people of pensionable age without a retirement pension, and people caring for children all day.
These people therefore do not have to deal with health insurance. Neither do employees for whom their employer pays health insurance. Those who then pay health insurance for themselves are the self-employed and people without a job who are not registered with the employment office. They therefore have to deal with health insurance themselves and keep track of whether they have paid health insurance.
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Not everyone pays social security. But those who have to pay it are employers, employees, self-employed persons, foreign employees and persons voluntarily participating in pension insurance.
Again, employees do not have to deal with social security payments as their employer pays them for them. However, those who have to deal with social insurance are again self-employed persons.
Find out when a self-employed person is entitled to unemployment benefit and sickness benefit.
In practice, it is often the case that a debt is incurred simply because of a forgotten payment or incorrectly set up advances. Clients often turn to us only when they have already received a statement of arrears or a demand for payment.
Paying your health insurance is compulsory under the Public Health Insurance Act. Should a self-employed or unemployed person fail to pay the insurance, he or she will incur a debt. In addition, with each passing day, a penalty is added , which is set at 0.05 of the amount owed. The health insurer is legally obliged to recover this debt and the penalty from the debtor. The exception in this case is the insurance premium up to CZK 200 and the penalty up to CZK 100 per calendar year.
In the event of a debt, action must be taken. Contact your health insurance company as soon as possible to find out the amount of the debt and the penalty. If you can afford it, pay the debt in full as soon as possible. It is common practice to forgive the penalty once the debt has been paid. However, there are several conditions that must be met. First of all, you must not be in liquidation, you must not be the subject of an insolvency petition and you must have paid your premiums in full.
If you are short of funds, it is possible to apply for a repayment plan. The insurance company is not obliged to give you one, but it usually gives them to people who are genuinely interested in repaying the debt. However, if you ignore the debt, foreclosure proceedings will be initiated and the debt will be collected.
Execution on account is one of the relatively easy options for the bailiff to get to the recovered amount. How does the process work, to what extent is your disposal of your account restricted, how are family members’ bank accounts affected and when is your account unblocked again? This is the focus of our next article.
A similar situation applies to social insurance. If you don’t pay National Insurance, you will incur a debt and a penalty. The penalty is based on the Czech National Bank’s repo rate, which is set for the first day of the calendar half-year in which the debt is incurred, plus 8%. If you pay the debt in instalments, the penalty is reduced and is 0.025 of the amount owed for each day.
You will be notified of the debt by the district social security administration and subsequently sent a payment order or statement of arrears for payment. If you fail to pay the debt including the penalty, you are still liable to execution and debt recovery.
We know from our practice as solicitors that health or social security debt is often incurred by people who originally wanted to avoid it. Typically, this is when a person changes jobs, starts a business, or stops registering with the unemployment office and forgets to adjust their insurance payments. The debt can then be incurred within a few months without the insured person noticing.
Does anyone owe you money? Debt collection through our service will usually guarantee you a faster, more efficient and significantly cheaper solution. You will save yourself weeks or months of pleas and reminders to pay, and usually save on costly court cases.
As an employee, you may find that your employer does not pay your social security or health insurance for you. Fortunately, you can rest easy. It doesn’t mean that you’re accruing a debt somewhere or that your hours don’t count towards your pension. It is the employer who has to pay the insurance for the employee and therefore only the employer will bear the consequences.
If you suspect that your employer is not paying social security and health insurance for you, it is a good idea (but not compulsory) to report this as soon as possible. In the case of social insurance, to the district social security office and in the case of health insurance, to your health insurance company. In case of non-payment of social insurance, you can terminate your employment contract and quit your job.
Some employees are worried that they will lose their right to health care or pension because of their employer’s failure to pay their insurance premiums. However, in reality, the employer is liable for the premiums and the employee does not lose health care because of his or her misconduct.
If you are about to give notice at work, we will protect your rights. With us, you can be sure that your notice will be valid and you will not lose anything you are entitled to under your employment contract.
Unfortunately, however, it may happen that the employer will not respond to calls from the Social Insurance Institution for retroactive payment of social insurance. In this case, you should send your employment contract and an affidavit of your employment from two witnesses (e.g. former colleagues) to the Social Security Office.
In addition, you should also make sure that your employer submits a pension registration form with the correct amount of wages to the Social Insurance Institution. This is crucial for the award and determination of your future pension.
We recommend that you start addressing the debt situation as soon as possible. If the person responds to the first call from the insurance company or the Czech Social Security Administration, it is often possible to arrange a repayment plan or ask for a waiver of part of the penalty.
A health or social security debt can build up over time with penalties and become a significant financial problem. If you’re not sure what the actual amount of the debt is or how to proceed, it’s a good idea to deal with the situation early and find out your options for paying it off or making a payment plan.
Health insurance is compulsory for everyone, but not everyone pays for it themselves. It is paid for by the state for children, pensioners, parents on maternity leave or jobseekers. Employees are covered by their employer, while the self-employed and unemployed have to pay for their own health insurance. Social insurance is paid by employers, employees, the self-employed and others. Again, employees do not pay it themselves – their employer pays it for them.
If a self-employed or unemployed person does not pay their insurance, they incur a debt and a daily penalty. The debt can lead to foreclosure. The solution is to contact the insurance company or the Social Insurance Institution (OSSZ) in good time, request a payment plan and pay the debt as soon as possible. In some cases, you can also apply for forgiveness of the penalty.
The employee is not liable for the employer’s failure to pay insurance on his/her behalf. The debt is not owed to him, but to the employer. If you suspect this, you should contact the health insurance company or the Social Security Office. In extreme cases, the employment relationship can be terminated immediately. It is also important to check that the employer is submitting the correct pension registration forms.
Check with your health insurance company to find out what you owe. Most insurers also allow you to check via the client portal or by phone. The insurance company can also issue you with a certificate of no debt on request.
Information about the debt is provided by the Czech Social Security Administration (CSSA). An overview of payments can be obtained from your local Social Security Office or via the Social Security ePortal.
The premium debt itself is usually not forgiven. However, in some cases, partial or total forgiveness of penalties may be granted, for example on application or in the context of exceptional events.
The institutions can start collecting the debt. A demand for payment will usually come first, a payment order may be issued later and the debt may be enforced.
Yes. Both the health insurance company and the Social Insurance Institution may allow a payment plan. However, you must apply for one and prove that you cannot pay the debt in one lump sum.
The employer is obliged to pay the insurance premiums. If they do not pay it, they may be in breach of the law. This does not make the employee ineligible for health care or pension credit.
Yes, but limitation periods are quite long and can be interrupted, for example, by the start of an enforcement action. The debt can therefore be recovered even after several years.
Have you applied for sickness, maternity, parental allowance or other benefit and instead of the expected support, you received a rejection? Or were you awarded a benefit in a lower amount than is appropriate for your situation?
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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