Social safety net in Pluvia and the Saxean Isles

The Social safety net in Pluvia and the Saxean Isles is divided by the Pluvian and Saxean government into two branches: health insurance and a system of cash transfers known as Security Benefits. The healthcare system is divided into two parts: private and public health insurance. Additionally, the Security Benefit system is divided into several parts: old-age pension, survivors' benefits for widows, unemployment insurance, workers' compensation, disability insurance, and child allowance.

The main concept is that individuals should be largely responsible for their own security, but those who deserve help in specific circumstances should be provided it. A series of ring-fenced payroll taxes pay for the individual benefits. The main advantage of the system is that its costs to the government are generally lower than in other developed countries. The main drawback is that benefits are generally limited in duration and amount and do not cover all circumstances.

Social safety net by benefit

Health

Pluvia and the Saxean Isles has both private and public health insurance.

The public health insurance system is called the Health Catastrophe Security Benefit. It is intended to provide for those people who have incurred serious medical bills to avoid them going bankrupt. HCSB pays fully without co-pay or deductible for preventive care such as check-ups, immunizations, cancer screenings, and other procedures. HCSB also pays fully for all care once an individual or household has met their deductible. Before reaching their deductible, individuals on the HCSB are expected to pay for the cost of all non-preventive care. The deductible for an individual or household is 10% of their income, with no absolute limit. Thus, including the 5% HCSB tax, individuals on HSCB will pay a maximum of 15% of their income each year in health-related costs. Individuals making fewer than 40% of the median income receive a tax credit equal to a sliding-scale percentage of their HCSB tax paid that year. HCSB covers limited dental and vision care for children and does not cover dental or vision care for adults, meaning many individuals and households on HCSB need private dental or vision insurance. About 60% of the population uses HCSB, and HCSB spending represents about 40% of total healthcare spending in the nation.

Private health insurance may be purchased from any number of private insurers. Individuals who utilize private insurance pay premiums every month (which average CR 150-200) and in almost all cases must meet a deductible (which averages CR 1,000), after which private insurance pays between 70-90% of the cost, up to an out-of-pocket limit (which averages CR 3,000) after which private insurance pays 100% of costs. Individuals or households may pay higher premiums in exchange for a lower deductible and out-of-pocket limit, and vice versa. The government subsidizes individuals who pay for private insurance by issuing them a refundable tax credit equal to 12.5% of their annual premium, capped at CR 300. Individuals and households who have private health insurance are still expected to pay the 5% HCSB tax. Thus, at the high end of the average, an individual could expect to pay about CR 5,400 (CR 2,400 in premiums + CR 3,000 OOPL) + 5% of their annual income in health-related costs. The benefit of utilizing private health insurance is that doctors and hospitals almost always prioritize care for those on private health insurance, thus allowing faster and more high-quality care. About 40% of the population uses private health insurance, and private health insurance represents about 60% of total healthcare spending in the nation.

Old age

The public pension in Pluvia and the Saxean Isles is called the Old Age Security Benefit. The OASB is funded by a 7% tax on employee income, shared jointly by employee and employer. It is intended to provide a modest level of security for older individuals who may or may not be working. The OASB may be claimed by any citizen 66 or older or any permanent resident 68 or older. For citizens, it provides a yearly benefit equal to 40% of the yearly median income (3.33% of YMI/month), and for permanent residents, it provides a yearly benefit of 20% of the YMI (1.67% of YMI/month). This pension is intended to cover basic living expenses, not all costs for retirees, and is expected to be supplemented by private pensions and/or savings.

Private pensions are not uncommon for older workers in Pluvia and the Saxean Isles, but for younger workers they are much less prevalent, especially for those workers born after 1990. The government instituted changes to taxation and provision of benefits following criticism that a tendency towards "gold-plated pension plans" was developing among Pluvian businesses, which would drive up product and service prices and make Pluvian businesses less competitive internationally due to these increased costs. Whether or not these criticisms were true on the front or the back end is still up for debate, but the change towards "skinnier", or more limited, pension plans, as well as the ending of pension plans in favor of defined-contribution accounts is now well entrenched.

The third leg of the old-age social safety net is defined-contribution accounts. These are savings accounts which accumulate contributions from employees, often employers, and tax refunds over time. Withdrawals from the accounts may be made tax-free at age 66 or older, or paying a tax penalty if a withdrawal is made sooner. These contributions are subject to annual limits and are generally made before taxes are deducted. Additionally, up to 25% of the employee-side OASB tax will be refunded to these accounts subject to annual limits. As they are not defined-benefit plans, the utility of these is confined to how much an employee/employer has contributed, thus advantaging those who can afford to save more.

Widow's Security Benefit

In Pluvia and the Saxean Isles, if the husband of a woman over 40 dies, she is eligible for the Widow's Security Benefit. The WSB is funded by a 1% tax on employee income, shared jointly by employee and employer. It is intended to provide a modest level of security for slightly older women who are missing the income of their husband. The OASB provides a yearly benefit equal to 25% of the yearly median income (2.08% of YMI/month). This benefit is rooted in an earlier time, when women were less likely to work and more reliant on the income of their husband. It has persisted into the modern day, however, and may be considered analogous to survivor's benefits in other countries. It is not, however, contingent upon the husband having paid OASB taxes nor a refund of those taxes, but a separate benefit entirely.

Two reform movements are underway with regards to the WSB. The first seeks to gradually raise the eligibility threshold to women over 60, since the earlier number is a product of a time of lower life expectancy, thus modernizing the benefit and saving the state money. The second seeks to extend the benefit to widowers and same-sex couples in civil unions.

Jobless Security Benefit

Unemployment insurance in Pluvia and the Saxean Isles is called the Jobless Security Benefit. The JSB is funded by a 1.5% tax on employee income, with employers paying about two-thirds of the cost. It is intended to provide a modest level of security for individuals who have been let go from their job. The JSB may be claimed by any citizen or resident with a work permit. It provides a weekly benefit equal to 50% of the minimum weekly wage, or CR 160. It is available for a maximum of 26 weeks in a 52-week period and is dependent on the number of weeks a person has been employed in the previous 52 weeks, with each week of employment providing an unemployment "credit." Thus, a person who has only worked 10 weeks in the last 52 is only eligible for 10 weeks of the JSB. Both the relatively low replacement rate and potentially short duration is intended to cover very basic living expenses, prod unemployed individuals to get back to work, and keep the cost to the system down. Individuals who belong to a union may receive additional support from the union while unemployed, though this is not guaranteed and many workers are not unionised.

Accident Security Benefit

The accident insurance and occupational diseases is a branch of social security often managed by the same agencies that the health branch. It is the oldest social security body. The legislation go back to 1898 and were included in the 31 December 1946 law creating the Social Security.

There are three social accidents for which the risk is better covered than by the accident assurance health insurance. The accident at work is the accident, whatever the cause, occurring because of or in connection with a job, to any person employed by one or more employers or entrepreneurs. Travel accident is an accident occurring on a route between work and home or during a mission on behalf of the employer. A professional disease is a disease of occupational origin and included in a list indicating any occupational diseases, their causes and the duration of incubation.

In these three cases, industrial accident, travel from home, and occupational disease, medical care and vocational rehabilitation are totally taken in charge by the Social Security. In case of permanent reduction of working capacity, the victim is entitled a capital (if the rate of permanent disability is less than 10%), and an annuity (if the rate is more than 10%). In case of the death of the insured, the beneficiaries (spouse, children and descendants dependents) receive a pension.

Family Security Benefit

Family benefits consist of:

• The family allowances granted from the 2nd dependent child, a fixed amount per child from the 3rd
• The Family Complement assigned to the household or the person whose resources do not exceed a ceiling
• The adopted child allowance attributed to parents adopting children since 2004. The PAJE replaced five previously existing benefits
• The special education allowance (AES) awarded to any person who is caring for a disabled child until the 20th birthday
• The maintenance allowance granted to the surviving spouse or parent or family home to raise an orphaned child
• The school allocation of available to children under 18 who continue their studies or placed under apprenticeship provided that their income does not exceed 55% of SMIC,
• The lone parent allowance granted in case of insufficient resources to persons bearing the burden alone of at least one child
• The housing family allowance granted in case of housing insalubrity
• The allocation of social housing in case of housing insalubrity to the elderly, the disabled, some unemployed and beneficiaries of the RMI.

Family benefits are granted to any French or foreign person residing in France, with a dependent child or children living in France under 20 (or 21 years for housing allowances to family and the Family).

Funding

Contributions

The Pluvian system of social security is financed by contributions by employees and employers based on the wages of employees. Each benefit has a dedicated tax and fund. Occasionally, in order to make up shortfalls in a benefit fund or to avoid future shortfalls, the National Assembly may increase the rate of tax. This is called a Temporary Security Benefit Adjustment (TSBA). TSBAs are limited by statute to no more than 50% of the base tax rate, must be reauthorized each year, and may not be in place for more than three years. They appear separately on an employee's paystub and indicate which benefit is being funded. For example, a code of TSBA - FSB on a paystub indicates a temporary increase in the rate of tax for the Family Security Benefit.

Fund/Benefit	Tax Rate	Refund
Health Catastrophe Security Benefit	5.0% employee/2.5% employer	Non-retirees sliding scale <CR 10,000, Retirees 33%
Old-age Security Benefit	3.5% employee & employer	25% if qualified defined-contribution account
Widow's Security Benefit	0.5% employee & employer	None
Jobless Security Benefit	0.5% employee/1.0% employer	None
Accident Security Benefit	0.25% employee/0.75-7.75% employer <CR 30,000	None
Disability Security Benefit	0.75% employee & employer	DSB recipients 50%
Family Security Benefit	2% employee & employer	None

Budget (Annual spending CR billions, 2020)

Fund	Spending	Resources	Balance
HCSB	6.8	7.5	0.7
OASB	10	7.4	-2.6
WSB	0.63	1	0.37
JSB	0.7	1.7	1.0
ASB	0.5	1.4	0.9
DSB	1.5	1.6	0.1
FSB	3.85	4.2	0.35
Total	24.0	24.8	-0.8