Govt moves to cut sickness, rehabilitation allowances from Jan

The four-party alliance government led by Kansallinen Kokoomus (National Coalition Party-NCP) is proposing a change to the calculation formula for sickness and rehabilitation allowances.

This would mean a stricter limit on annual income, which would result in more customers receiving their allowance at the lower earnings replacement rate, said the Social Insurance Institution-Kela in a press release on Wednesday.

Also, clients whose annual income exceeds the limit, would receive a smaller allowance than before.

If the proposal is approved by Parliament, the changes would also impact the partial sickness allowance and would go into effect on January 1, 2025.

At present, the sickness allowance for persons with an annual income up to EUR 35,769 is the equivalent 70 per cent of their annual income divided by 300.

For income above EUR 35,769, only 20 per cent of the annual income, divided by 300, counts towards the allowance.

The government proposed to change the calculation formula by lowering the limit on annual income from the current EUR 35,769 to EUR 27,633.

This would mean that the 70 per cent earnings replacement rate would only apply to income up to EUR 27,633.

Also, customers would receive less allowance for any part of their income above the specified limit, because only 15 per cent (down from 20 per cent) of their annual income, divided by 300, would accrue towards the allowance.

The proposed changes to the calculation formula would also apply to the partial sickness allowance, which uses the same formula for annual income.

The changes would result in a smaller allowance for individual customers and employer customers especially in higher income brackets.

The changes would not apply to persons whose annual income is EUR 27,633 or less.

The sickness allowance or partial sickness allowance would be calculated according to the new formula, if you are deemed medically unfit for work as of 1 January 2025 or later.

The rehabilitation allowance would also be calculated according to the new formula, if you start rehabilitation on or after 1 January 2025.