According to a recent Government Emergency Ordinance (OUG) in the fiscal domain published in the Official Gazette, it is stipulated that social insurance benefits (known as medical leave allowances) will fall into the category of income taxed at a rate of 10% for the Health Insurance Contribution (CASS). Previously, these incomes were exempt from Health Insurance Contribution payments. Specifically, this change translates to employees receiving medical leave allowances that are 10% lower starting from January 2024, as employers will need to withhold the percentage for CASS.
However, the 10% imposition for CASS is not exclusively applicable to employees, but also to individuals who optionally insure themselves for these leaves (self-employed, freelancers), unemployed individuals entitled to medical leave allowances, as well as other categories of individuals who, although not employed, are entitled to medical allowances under certain determined conditions.
Regarding the category of allowances subject to CASS payment, this includes:
- Medical leaves and allowances for temporary work incapacity caused by common illnesses or accidents outside of work;
- Medical leaves and allowances for illness prevention and work capacity recovery, exclusively for situations resulting from work accidents or occupational diseases;
- Maternity leaves and allowances;
- Medical leaves and allowances for caring for a sick child;
- Medical leaves and allowances for caring for a patient with oncological conditions;
- Maternal risk leaves and allowances granted to insured persons under the conditions provided by Government Emergency Ordinance no. 96/2003 regarding maternity protection in the workplace, with subsequent amendments and completions.
Thus, from the interpretation of the above enumeration, it is clear that medical leave allowances granted to individuals on medical leave for temporary work incapacity due to work accidents or occupational diseases remain exempt from CASS.
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Ana Maria Nistor – Attorney at Law
