Social security in the Czech Republic

Chapters of the article

• Pillars of Social Security in the Czech Republic
• Social Security Law
• Sickness insurance
• Pension insurance
• Social security premiums

Pillars of social security in the Czech Republic

Thesocial security system is a comprehensive and central instrument of the government and its social policy. In turn, from the perspective of the individual, it is then a supportive network of regulations, institutions and rights that help to assist them with financial adversity in various life situations so that they cannot fall to the bottom.

The social security system in the Czech Republic consists of sickness, pension and health insurance, state unemployment policy and a system of social support benefits. Most of the components are covered by the state budget, with the exception of health insurance, which is mainly managed by health insurance companies (however, state regulation in the form of legislation also operates in this area).

The main components of social security in the Czech Republic include:

1. Sickness insurance:

• Sick leave: financial support for incapacity to work due to illness.
• Attendance allowance: support for caring for a sick family member.
• Maternity cash assistance (maternity leave): support for mothers before and after childbirth.

2. Pension insurance:

• Old-age pension: support for the elderly after retirement age.
• Invalidity pension: support for people who are unable to work due to disability.
• Survivors’ pension: support for surviving family members, such as widows, widowers and orphans.

3. State social assistance:

• Child benefit: support for families with children.
• Parental allowance: financial support for parents to care for a young child.
• Housing allowance: support for low-income families and individuals to cover housing costs.

4. Social assistance:

• Material hardship: support for individuals and families in material need.
• Care allowance: support for people in need of long-term care.

5. Unemployment support:

• Unemployment benefit: financial support for people who have lost their job and are actively looking for a new one.

Social security law

The main regulation of the social security system used to be the Social Security Act. However, this has been repealed and replaced by other legislation. Overall, the social security field is covered by a large number of regulations divided according to different areas. Let us mention at least the most important ones. These are:

• act No 48/1997 Coll., on public health insurance and on amendments to certain related acts,
• act No 551/1991 Coll., on the General Health Insurance Fund of the Czech Republic,
• act No. 280/1992 Coll., on departmental, branch, enterprise and other health insurance companies,
• act No. 592/1992 Coll., on general health insurance premiums,
• act No. 187/2006 Coll., on sickness insurance,
• act No 155/1995 Coll., on pension insurance,
• act No 582/1991 Coll., on the organisation and implementation of social security,
• act No 589/1992 Coll., on social security contributions and contributions to state employment policy,
• act No 117/1995 Coll., on State Social Support,
• act No 435/2004 Coll., on Employment,
• act No. 329/2011 Coll., on the provision of benefits to persons with disabilities,
• act No. 108/2006 Coll., on Social Services,
• act No. 111/2006 Coll., on aid in material distress,
• act No 110/2006 Coll., on the minimum subsistence level.

According to the Act on the Organisation and Implementation of Social Security, the main social security bodies are:

• Ministry of Labour and Social Affairs,
• TheCzech Social Security Administration,
• the territorial social security administrations,
• The Institute for Health Assessment,
• the Ministry of the Interior,
• ministry of Justice,
• ministry of Defence.

Sickness insurance

The sickness insurance scheme is primarily designed for wage earners, who can receive cash sickness insurance benefits in various situations, such as temporary incapacity for work due to illness or injury or quarantine, treatment of a family member, pregnancy and maternity or childcare.

Employees and self-employed persons are covered by sickness insurance. A significant difference is that while sickness insurance is compulsory for employees, sickness insurance remains voluntary for the self-employed.

However, even for employees, certain conditions should occur at the same time to trigger participation in sickness insurance. These include:

• the performance of work in the Czech Republic in an employment relationship that may give rise to participation in sickness insurance,
• the extent of employment, which is determined by a minimum number of days, i.e. 15 days
• the minimum amount of the agreed income (this is the so-called qualifying income).

Sickness insurance subsequently provides four types of cash benefits, namely:

• sickness benefit,
• maternity allowance,
• nursing allowance,
• compensatory allowance for pregnancy and maternity.

Each benefit is paid at different intervals and under different conditions. Probably the most frequently encountered is the payment of sickness benefit, which protects employees in situations where there is a threat of loss of income due to illness. Sick pay is paid from the 15th calendar day of the temporary incapacity for work, in calendar days. For the first 14 calendar days, an employee who has an employment relationship giving rise to sickness insurance is covered by wage compensation provided by his employer.

Pension insurance

Participation in pension insurance may be of two types. As far as basic pension insurance is concerned, this applies to all of us. Participation is compulsory.

basic pension insurance is compulsory if certain conditions are met. At the same time, however, the Pension Insurance Act also allows forvoluntary participation in pension insurance. This then has uniformly set parameters for everyone, it just depends on which company and how much you are willing to save and how favourable the entry conditions are.

The pension system works with two basic principles, which are the principle of merit and solidarity. These are that while a person’s pension increases with higher pension contributions (the merit principle), at the same time a person’s pension increases more slowly with higher income (the solidarity principle).

Pensions are granted from the basic pension insurance:

• old-age pensions (including old-age pensions granted before retirement age – hereinafter referred to as ‘early retirement pension’),
• invalidity – if there is a long-term adverse health condition corresponding to total invalidity, in other words, if there is a decline in the ability to engage in substantial gainful activity of at least a certain percentage, which is precisely quantified according to binding tables.
• widow’s and widower’s pension – here several conditions are cumulated, where, in the event of the death of one of the spouses, the marriage continues and, at the same time, the deceased meets or would have met the conditions for entitlement to his or her own pension at the time of death
• orphan’s pension – entitlement arises from the deceased parent on whom the child is dependent at the time of death

Social security contributions

The Act on Social Security Contributions and State Employment Policy Contributions contains the legal regulation. Under the Act, social security contributions are collected by district social security administrations and paid by employees, employers and self-employed persons.

The social security system in the Czech Republic consists of

• social insurance,
• state social assistance and
• social assistance.