Govt moves to stiffen unemployment, housing, other benefits

The government is preparing to implement many changes to Kela benefits, affecting both benefit rates and eligibility criteria, said the national social insurance institution-Kela in a recent press release.

The planned changes were outlined in the programme of the four-party right-wing alliance government.

Based on the currently available information, there will be cuts next year to unemployment benefits, general housing allowances and other benefits.

Child benefits and the Kela reimbursements for private doctor consultations, however, will be raised.

Some of the changes will be made effective over the course of the year, and not immediately at the beginning of 2024.

The government programme outlines a large number of changes to social security in 2024. The Ministry of Social Affairs and Health will prepare the government’s proposals, which will then be submitted to Parliament.

The pensions paid by Kela (national pension and guarantee pension), along with disability allowances and front-veterans’ supplements, are routinely increased each year in line with the National Pensions Index.

The percentage of increase will become known on 13 October 2023, when Kela is scheduled to confirm the National Pensions Index that will be applied starting 1 January 2024.

The grounds of eligibility for the housing allowance for pensioners will remain the same as this year in 2024.

The amounts of the unemployment benefits paid by Kela (labour market subsidy and basic unemployment allowance) will remain unchanged in 2024 (37.21 euros per day), if the Government’s planned indexation freeze is approved by the Parliament.

A large number of changes are being prepared to unemployment benefits. Some of them are planned to come into effect at the turn of the year, others later.

The waiting period for unemployment benefits will be lengthened from five to seven days at the beginning of next year. Compensations for accrued but untaken annual leave, paid upon termination, will also be factored in when determining the start of unemployment benefits.

It is planned that, starting 1 April 2024, unemployment benefits will no longer be supplemented by child increases.

Child increases have been paid to unemployed jobseekers with dependent children. In practice, this will mean a 10–20 percent reduction in labour market subsidies and basic unemployment allowances.

The rules for adjusting unemployment benefits to earnings will be revised as well.Unemployment benefit recipients can currently earn up to 300 euros per month without it affecting their benefits, but there are plans to remove this exempt amount.

The work requirement that employees must meet to qualify for unemployment benefits is planned to be extended from 6 to 12 months.

This change is scheduled to take effect in September 2024. Further, the requirement would be met by earning a certain amount of income and not by working a certain number of hours per week as is currently the case.

Child benefits are planned to be increased initially at the beginning of 2024, with a subsequent increase to follow later in the year. Specifically, the increases will raise child benefits and single-parent supplements for children under three, as well as introduce a higher rate of child benefit for the fourth child and for the fifth and all subsequent children.

Child care allowances will not be index adjusted at the turn of the year as would usually be the case. Rather, the rates of the allowances will stay the same as in 2023, provided that Parliament approves the Government’s proposal for an indexation freeze.

The eligibility criteria for the general housing allowance are planned to be changed, resulting in lower rates of allowance.

Housing allowances will be impacted more strongly by the recipient’s other income, housing costs will be covered at a lower percentage, the earned income deduction will be abolished, and housing allowances will no longer be payable for owner-occupied homes. The rules for determining the basic deductible, which affects the amount of the allowance, will be changed in a way to partially offset the impact of the planned changes on families with children.

The changes are scheduled to take effect in April 2024. Housing allowances already in payment will be adjusted when they are next reviewed. Housing allowances for owner-occupied homes will end in September 2024.

The Government’s proposed indexation freeze, which is currently in preparation, will also affect the general housing allowance. If Parliament approves the proposal, the criteria according to which housing allowances are determined, such as the maximum housing costs, will not be index adjusted at the turn of the year.

The basic amounts of basic social assistance will be index adjusted normally on 1 January 2024. The 10 percent increase for children's basic amounts for 2023 ends on 31 December 2023.

The Government is preparing a legislative proposal that would clarify and tighten the rules governing how housing costs are recognised.

The change is planned to come into effect some time in 2024. The schedule will become clearer and more certain as the preparations for the proposal proceed.

The minimum rate of the rehabilitation allowance for young persons and the allowance paid during vocational rehabilitation is currently 36.91 euros per working day.

This is now proposed to be changed so that, starting 1 January 2024, the minimum rate would be the same as that of the rehabilitation and sickness allowances, i.e., 31.99 euros per working day. In practice, this would mean a reduction of about 13 percent in the rehabilitation allowance for young persons and the rehabilitation allowance paid during participation in vocational rehabilitation.

Kela reimbursements for private doctor consultations and the maximum limit on out-of-pocket medicine expenses

The reimbursement available from Kela for private doctor visits is planned to be increased significantly. Currently, Kela pays on average 8 euros as reimbursement for the cost of seeing a doctor in private practice. The higher rate of reimbursement is planned to be introduced on 1 January 2024.

The annual maximum limit on out-of-pocket medicine expenses will go up in 2024. The maximum limit was not index adjusted this year; rather, it remained the same as in 2022, or 592.16 euros per calendar year. Despite the lack of an index adjustment in 2022, the maximum limit will not be increased twice next year to keep pace with the index. Rather, the Government is preparing a proposal whereby only the 2024 index adjustment would be applied.