The House of Representatives has passed House Bill No. 8461 and House Bill No. 8512, granting the President the power to suspend the premium contribution hikes for social security programmes for 2021.

House Bill No. 8461 seeks to authorise the President to suspend the premium contribution hike to the Philippine Health Insurance Corporation (PhilHealth), as well as House Bill No. 8512, which provides the President the power to defer the scheduled hike in contributions to the Social Security System (SSS).

Both systems were mandated by existing laws to increase their premium rates in 2021, however the coronavirus pandemic has resulted in resistance from Filipino residents and businesses for any increases in premium rates. As a result, the government hopes that the suspension will provide tax relief for businesses, workers and the self-employed as the Philippines tries to recover from the economic impact of the coronavirus.

As an economy dependent on consumption, 2020 saw GDP shrink by 9.5%, the largest contraction ever recorded and saw the country suffer its first recession in 30 years, showcasing the devastating impact of lockdown measures.

What is PhilHealth?

PhilHealth is a cooperation controlled by the government that implements the Philippines universal healthcare programme, providing citizens with access to affordable healthcare services and financial assistance. It covers everything from hospital costs and medicine to subsidies for room and boarding, among many others. The government had planned to increase the premium rate to 3.5%, instead it will remain at 3%.

What is the Social Security System?

The Social Security System (SSS) is a social insurance programme run by the state, it was established to protect members and their families. The SSS provides maternity leave, funeral, disability, retirement, death, sickness, involuntary separation and unemployment benefits. All private employers and employees are obligated to join the programme. The contribution rate for the SSS was set to increase from the current 12% to 13%, however this has now been suspended.

These two new bills only require the signature of the President in order for them to come into law.

For more information and guidance on coronavirus support measures for businesses, employers and employees, visit the activpayroll latest news page.

For more information on tax and social security laws in the Philippines, browse activpayroll’s Philippines Global Insight Guide.

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