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Starting in 2026, a cap will be introduced on sickness benefits and the parental benefits ceiling lowered to ensure that social benefits do not become unaffordable for the state, as decided by government members during budget discussions.
By 2026, the maximum rate for parental benefits will be reduced from the current three times the average income taxed with social tax to two times, or €3,670, based on the 2024 average.
The government aims to save €13 million in the 2026 state budget with this change, with savings expected to grow to €27 million annually by 2027. Last year, the cost of parental benefits from the state budget amounted to €349 million.
This reduction in the upper limit will affect approximately 3,500 people annually, or about 12 percent of those receiving parental benefits. To compensate for the lower cap, parents will still receive the same amount of parental benefits even if they work and earn a salary simultaneously.
Additionally, starting in 2026, a cap will be introduced on temporary incapacity for work benefits, which will also be tied to the average wage from two years prior.
The cap will not apply to the portion of sickness benefits paid by employers, which covers days four through eight of an illness. This change is expected to save the budget of the health insurance system, which is currently struggling with a deficit, between €4 million and €4.4 million annually. Currently, the costs for sickness and caregiving benefits amount to nearly €150 million, an increase of €92 million over the past decade.
Starting in 2025, the government will cease paying the single pensioner allowance to those living in nursing homes. The government justified this decision by stating that, as a result of the care reform, the state already covers a significant portion of nursing home costs, rendering the additional €200 support unnecessary.
Finance minister opposed to using health insurance fund reserves
This change will affect approximately 6,700 individuals in 2025, accounting for about 10 percent of all recipients of the single pensioner allowance. The government expects this move to save between €1.34 million and €1.54 million annually. This years total budget for the single pensioner allowance is €17.9 million.
Furthermore, from 2026, the state will stop paying social tax for a spouse or registered partner who stays at home to care for a child. The aim of this change is to encourage both parents to enter the labor market, ensuring they have access to health insurance, as well as pension and unemployment insurance. However, the state will continue to pay social tax for parents raising children under the age of three and for parents with three or more children.
According to the Health Insurance Fund, the state currently pays social tax for the health insurance of 1,051 dependent spouses or registered partners. These individuals will have the option to seek assistance from the Unemployment Insurance Fund, find employment, or enter into a voluntary insurance contract.
The estimated revenue for the state budget from this change is between €1.4 million and €3.3 million annually, though the exact impact will depend on the choices people make.
Health minister: it makes sense for benefits to share ceilings
Minister of Health Riina Sikkut (SDE) told ERR in an interview that the new ceiling will apply to both the parental benefit and the incapacity for work benefit, as it makes sense to standardize these things.
Asked why employers are not allowed to reduce their contribution to sickness benefits in a situation where the state is, Sikkut said that employers organizations are welcome to propose it. The first three days of sick leave fetch no compensation, while the employer pays for days four to eight, with the state taking over from there.
"We have indeed decided to set a cap on the compensation paid by the state. However, a legal amendment that came into effect last year allows employers to compensate sick days more generously without incurring fringe benefit taxes. Currently, sick leave compensation is 70 percent, and it will remain so in the future. Employers can choose to cover the remaining 30 percent, between 70 percent and full pay, for their employees. This can be done without the additional burden of fringe benefit taxes," the minister said.
Sikkut said that the greatest saving in the field of healthcare will happen through optimization at the Health Insurance Fund, where switching to performance-based funding and joint medicinal products tenders are expected to save €21 million. She added that the parental benefit ceiling cut, sickness benefit ceiling and proposals for a more effective Health Insurance Fund are expected to save over €50 million all told. |
