In 2019, Republic Act No. 11223, or the Universal Health Care (UHC) Act, was enacted with the purpose of protecting and promoting the right to health of all Filipinos and inculcating in them a conscience sanitary. This landmark legislation aims to progressively realize universal health care through a systematic approach and by clearly delineating the roles of key agencies and stakeholders to ensure that all Filipinos have equitable access to affordable, quality health services. , and that they are protected against any financial risk. Every Filipino enjoys immediate eligibility and access to preventive, promotional, curative, rehabilitative and palliative care for medical, dental, mental and emergency health services, provided as community-based health services. population or individuals. The UHC policy involves substantial investments, depending on the funds available for program maintenance; therefore, the government must ensure that it has sufficient funding to provide medical benefits to all, whether or not membership is contributory.
Under the CSU law, premium contributions must be increased each year, starting in 2020 at 3%, followed by 3.5% in 2021, 4% in 2022, 4.5% in 2023, until that they reach a maximum rate of 5% by 2024 to 2025. . It may be recalled that PhilHealth postponed the increase in premiums from 3% to 3.5% last year, effin effect for an interim period, unless Congress passes a new law authorizing a further adjournment.
After last year’s postponement, the Philippine Health Insurance Corporation (PhilHealth) announced the implementation of premium contribution provided for all direct contributors from 2022. As prescribed in Section 10 of the CSU and by PhilHealth Circular No. 2020-0005 on premium contribution In the National Health Insurance Program (Revision 1), the premium rate for CY 2022 is 4% for all direct contributors with an income floor of P10,000 and an income cap of P80,000 efffrom January 2022.
Based on PhilHealth Circular No. 2020-0005, the basis for contributions is an employee’s monthly base salary (MBS) or fixed base rate, which excludes sales commissions, overtime, allowances , 13e monthly salary, bonuses or other gratuities. In addition, deductions from the employee’s salary, resulting from overtime, tardiness, unpaid leave, absences or other similar circumstances, are also excluded from the calculation. For monthly-paid and daily-paid employees, their MBS should be calculated based on the Estimated Equivalent Monthly Rate (EMR) formula published in the latest edition of the Department of Labor and Employment (DoLE)-Bureau of Working Condition’s Handbook on Worker’s Statutory Monetary Benefits.
As part of the recent PhilHealth notice (2022-0010), the adjusted 4% contribution rate went into effect in January of this year for employers and self-paying members. It takes thffect in the Electronic Premium Reporting System (EPRS) and the PhilHealth Member Portal (PMP) from June 2022.
For the period January to May 2022, members and employers who have already paid their dues are further requested to generate the corresponding Premium Account Statement (PAS) for the paid periods to enable them to settle the differential payments of 1% or discounts until December 31. Since pay for these periods had already been paid to the employees, differential payments or discounts of 1% can only be deducted prospectively in future pay periods.
Employers will face additional administrative work to manage the amortization of 1% differential payments or payroll remittances for their employees until they are fully paid within PhilHealth’s prescribed timelines. To manage employee cash flow expectations, employers can offer a staggered levy of 1% diffpayments or installments for the remaining period of the calendar year, i.e. from July to December 2022, instead of a standard deduction.
Since PhilHealth premiums are classiIfTitled “non-taxable/exempt remuneration income”, the additional payments deducted from salary will reduce employees’ taxable income and withholding tax on remuneration. Once premium contribution changes have been implemented in payroll systems, employers should verify that calculated payroll deductions are correctly entered during their regular payroll processing.
But what about the period from January to May 2022, when payroll processing was complete and net pay had already been paid out to employees? To correctly calculate the total employee tax due for the year and the amount of tax to be deducted from payroll at the end of the year, employers have the option of including the employee share in the 1 % diffpayments or discounts in the current payroll process, where they will be deducted, or include the 1% global differential payments as a year-end adjustment. It can be difficult to control the additional contribution for payroll purposes and to capture the tax due and the remaining tax due at the end of the year, but employers are obliged to carry out these additional administrative activities for payroll tax compliance.
The adjustment for the 1% diffThe potentials for payments or rebates seem simpler and clearer for active employees than for separated or resigning employees, where gray areas need to be clarified.Ifcation. If the contribution rate adjustment applies retroactively to January 2022, are former employers required to pay the 1% diffpotential in remittances for separated employees? Do employers only hand over their share of the rebate or must they also hand over the terminated employees’ share? As of this writing, PhilHealth is expected to issue additional guidelines to address these issues.
While some direct contributors may not welcome increased PhilHealth premium contributions in this time of rising fuel and commodity prices, the policy intent of the UHC Act should give PhilHealth members the consolation to stay engaged in the program. The ultimate goal is for every Filipino to enjoy universal health coverage – an achievable goal with a strong and sustainable fund. As author Rhonda Byrne said, “By all means ask for abundance and health for yourselves, but also ask that it be given to everyone.”
Any views or opinions presented in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general informational purposes only and should not be used as a substitute for specific advice.
Marvin L. Madrigalejo senior manager in the client accounting services department of Isla Lipana & Co., the Philippine PwC network firm.