The benefits for persons with changed capacity

19 October 2017.

As of January 1, 2012, the Hungarian system providing benefits for persons with changed working capacity has changed. The option for awarding disability pension expired. The formerly awarded disability pensions have been transformed into health insurance – i.e. disability or rehabilitation – benefits. Such benefits may be claimed by persons who have suffered recent changes in their working capacity.

The main objective of the changes is to consistently enforce the rehabilitation approach. According to the new conditions pecuniary benefits may only be awarded when a person with changed working capacity is unable to make a proper living of their work incomes. The criteria of the new benefits motivate to rehabilitation and reintegration into the labor market. The exercise of the vested working capacity is enforced through closely governed rehabilitation proceeding.

Formerly awarded disability pensions transformed into benefits depending on age and state of health. Under constant terms persons who had been disability pensioners before 2012 and reached the retirement age by the end of 2011 i.e. are above 62 years of age are now receiving old-age pensions. Those who have not reached the retirement age but are above 57 years of age (i.e. were born in 1954 or earlier) and/or had been disability pensioners with completely lost working capacity are receiving disability benefit as of January 1, 2012. The main criteria of such benefit are equivalent to those of the former disability pension.

Disability pensions of those who did not reach 57 years of age by the end of 2011 (i.e. were born after 1954) and have had vested working capacity have transformed into rehabilitation benefits. The ultimate form of such persons’ benefits is determined after the complex assessment of the state of their health. Provided that the state of their health is assessed above 60%, they are not entitled to benefits any longer. When having an assessed state of health at a maximum of 60% and they are ‘accessible to rehabilitation’, rehabilitation benefit may be awarded to them. Provided that rehabilitation is not recommended by the reviewing administrative body regarding a state of health of more than 60%, such benefits shall be continuously disbursed in the form of disability benefit. 

Conditions of social benefits disbursed for those with changed working capacity, who had been receiving pension-type social benefits in lieu of pensions, had also been altered by January 1, 2012. There has been a complete change concerning regular social annuity and temporary invalidity annuity. Such benefits for persons who reached 57 years of age by the end of 2011 are paid in the form of disability benefit, whereas benefits for younger people are paid in the form of rehabilitation benefit. In the latter case, the ultimate form of benefit shall also be determined following the complex assessment.

For persons with changed working capacity, who have recently submitted their applications and the state of their health remained under 60% but can be employed via rehabilitation or permanent work rehabilitation, rehabilitation benefit shall be awarded. It may be provided for the length of rehabilitation, but for no longer than a maximum period of 3 years. 

Disability benefit shall be awarded in cases where rehabilitation of persons with the state of health of a maximum degree of 60% is not recommended by the competent administrative body. This benefit shall also be awarded in cases where the claimant receives – besides 60% as a maximum degree of their state of health – is classified as ’accessible to rehabilitation’, but will reach the retirement age within 5 years following the date of submitting the application.

A further eligibility criterion of rehabilitation or disability benefits is having an insurance legal relationship for at least 1095 days within 5 years, 2555 days within 10 years, or 3650 days within 15 years before submitting the claim. The amount of benefit is equal to the percentage of the average income of the previous year prior to the award of benefit depending on the state of health and the level of accessibility to rehabilitation. The amount of benefits are confined within lower and upper bounds – also depending on the state of health and the level of accessibility to rehabilitation – determined as a percentage of the so called basic amount that is 96.010 Ft in 2017. 

Disability benefits amount to 40-70% of the average income, whereas rehabilitation benefits amount to 35-45% of that. The lowest amount of the awarded benefits is equal to 30% of the basic amount, whereas the highest amount is equal to 150% of that in cases of disability benefit for those completely inaccessible to rehabilitation.

Providing that a person’s state of health or accessibility to rehabilitation, receiving rehabilitation benefit or disability benefit, is above the level required for entitlement, benefit shall be terminated. In case of performing any gainful activity, disbursement of rehabilitation benefit or disability benefit shall be terminated as well if the average monthly income exceeds 150% of the minimum wage with regard to the average of three constant months respectively.

Rehabilitation and disability benefits are exempt from personal income tax. Rehabilitation benefits awarded as a new benefit – i.e. not as a transformation of disability pensions – from 2012 are subject to pension contribution, thus the length of its disbursement shall be accepted into the acknowledgeable length of service concerning old-age pensions.