Cabaero: Rate increases in new year

Nini Cabaero
·3 min read

WE WERE warned earlier before the pandemic struck, that premium and contribution rate increases for PhilHealth and the Social Security System (SSS) would take effect at the start of 2021.

The impact of these adjustments, however, makes one wonder if these moves will help or do more harm to those already suffering from loss or reduction of income during this health crisis. The general belief is that the increases in Philippine Health Insurance Corp. (PhilHealth) and SSS contributions at this time will hurt and not help Filipinos.

The call then is for PhilHealth and SSS to put these adjustments on hold and seek alternative, even innovative, ways to keep themselves viable and able to pay their beneficiaries. Is there no other way to keep these systems afloat without their having to collect more from workers and employers?

What makes things worse is the PhilHealth, in particular, has yet to renew itself following corruption allegations, putting into question its rate hike.

The PhilHealth had said members should expect to pay higher contributions in 2021 as it implements a scheduled rate adjustment. The premium rate will be increased to 3.5 percent from the current 3 percent. Yes, the increase was scheduled and not something that cropped up as the state health insurer covered expenses of those who got sick with the coronavirus disease (Covid-19). The adjustment is part of the Universal Health Care Law whose guidelines were published last March 5, ahead of the lockdown in the middle of that month.

The SSS, for its part, implements starting this month the new contribution rate of 13 percent, which is 1 percent higher than it was in 2020. The increase of 1 percent will be divided by the employed member and the employer at a contribution rate breakdown of 4.5 percent for the employed member and 8.5 percent for the employer. A worker with a P10,000 monthly salary will have to pay P100 more as the monthly SSS contribution is now at P1,300. This increase is mandated in Republic Act 11199, or the Social Security Act of 2018.

The Employers Confederation of the Philippines and other employers’ groups have asked the government to postpone such adjustments because the year 2020 was a difficult time for business and employment. “Many of the businesses have closed shop or are just re-starting under a more relaxed quarantine stage. The higher premium contributions set for the year 2021 will be an added burden,” the groups said in a statement.

The times call for PhilHealth and SSS to seek other ways to ensure their long-term viability and the payment of benefits to beneficiaries. The Philippine Association of Retired Persons (Parp) suggested years ago that, since the SSS is exempt from paying income tax, the agency should set aside at least 30 percent of its net annual income for a fixed pension fund to be used for increasing pensions and ensuring the payment of benefits. Why not consider that?