On 27 December 2017, the Egyptian Parliament has taken a crucial and valiant step towards the reform of Egypt’s health insurance system by approving the new Comprehensive Health Insurance Law no. 2 of 2018 (the “Law”). The Law comes to extend the health insurance system to all citizens and improve the health services.
The Law was published in the Official Gazette on 11 January 2018 and entered into force on 12 July 2018, i.e., after six months from its date of publication. The executive regulation of the Law was issued on 8 May 2018, by virtue of the Prime Ministerial Decree no. 909 of 2018 and entered into force on the effective date of the Law.
Scope of Application
The new Law covers all citizens, whether they are public or private employees, seasonal or permanent workers, men or women, child or adults. It also covers workers’ spouses, parents and children as well as work injuries. It applies mandatorily on all citizens existing in Egypt and optionally on Egyptians working or living abroad. It can be also extended to foreigners who are earning their income or living in Egypt subject to reciprocity.
Government shall guarantee free healthcare services to people who are unable to pay the contribution fees according to the rules to be determined by the Prime Minister1.
Timeline for the Implementation of the Law
The application of the new Law will be on a gradual basis on Egypt’s 27 governorates. Application of the new Law is divided into six phases as following:
- 1st phase covers 5 governorates: Port Said, Suez, Ismailia, North Sinai and South Sinai.
- 2nd phase covers 5 governorates: Luxor, Marsa Matrouh, Red sea, Qena and Aswan.
- 3rd phase covers 5 governorates: Alexandria, Al-Bihira, Damietta, Suhag and Kafr el-Sheikh.
- 4th phase covers 5 governorates: Beni-Suif, Assiout, Minya, Wadi-Algadeed and Fayoum.
- 5th phase covers 4 governorates: Al-Dakhleya, Al-Sharqiya, Al-Gharbia and Al-Monofya.
- 6th phase covers 3 governorates: Cairo, Giza and Qaliobia.
The full application of the Law on all Egypt’s governorates shall be achieved within maximum 15 years from the effective date of the Law. During such period, the Government is required to improve its healthcare facilities in order to raise their efficiency and quality.
Source of Funding
The new comprehensive health insurance system is based on diversified source of funding as summarized below:
1. Contributions Fees
- Employees Employees who are subject to the current Social Insurance Law no. 79 of 1975 (“SIL”) shall pay a contribution of 1% from their salaries. If the employee or the insured person is working with more than one employer, he shall pay the contribution for each income separately.
- Employers Employers who are subject to the SIL are required to deduct and pay 4% of their employees’ subscription salaries to the Social Insurance Authority, on a monthly basis, with a minimum contribution of EGP 50. This contribution will cover the employee’s sickness, treatment and work injuries.
- Other Insured Persons
All persons insured under Law no. 108 of 1976 (relating to the business owners and other beneficiaries) and the Egyptians who are working abroad as well as members of profession syndicates such as lawyers, engineers and doctors shall pay contribution fees amounting to 5% of their insured salary, the salary mentioned in the tax return or the maximum limit of their insured salary whichever is greater.
The abovementioned will also pay a contribution of 3% for their unemployed spouse or those who do not have a stable income and 1% for each child or dependent. Moreover, retired persons, widows and persons entitled to retirement pensions will pay 2% of their monthly pensions as a contribution to the health insurance system.
2. Solidarity Contribution
All companies, sole proprietorship and public economic authorities are required to pay 2.5‰ of their gross annual revenues to the Tax Authority as a “solidarity contribution” to be used in funding the new health insurance system. Such contribution amount will not be deducted from taxes.
This contribution is applicable immediately and is not subject to the general gradual application of the Law.
This solidarity contribution is strongly criticized for being calculated based on the gross revenues instead of the net income and also it will not be considered as deductible costs from taxes. Against these criticisms, it is expected that the Government will submit a proposed amendment to the Parliament regarding this contribution to placate investors and the other stakeholders.
3. Other Source of Funding
Other amounts will be deducted from other sources asfollowing:
- 75 piasters from the value of each cartoon of cigarettes sold in the domestic market whether it is imported or locally produced.
- 10% of the value of each sold tobacco derivatives other than cigarettes.
- 1 EGP to be collected from each vehicle passing high ways that are subject to collection of fees.
- 20 EGP to be paid for each year when extracting or renewing a driving license.
- 50 EGP to be paid for each year when extracting or renewing a car license with capacity less than 1.6 liters.
- 150 EGP to be paid for each year when extracting or renewing a car license with capacity 1.6 liters or less than 2 liters.
- 300 EGP to be paid for each year when extracting or renewing a car license with capacity 2 liters or more.
An amount ranging from EGP 1000 to 15000 to be paid by medical centers, clinics, pharmacies, and pharmaceutical companies when joining the health insurance system. 9.EGP 1000 for each bed in hospitals and medical centers when extracting their licenses.
The abovementioned amounts will be collected by the competent authorities, such as the Ministry of Health, the Ministry of Interior and the Ministry of Transport, and shall be transmitted to the General Authority for Comprehensive Health Insurance.
Violations & Sanctions
The Law stipulates that an additional annual amount will be imposed on individuals/companies who are late in making their payment obligations under the Law.
A penalty of no less than six month imprisonment and/or a fine between EGP 2,000 and EGP 10,000 shall apply for anyone who gives incorrect statements or refraining from providing the required information, if such violation led to illegally obtain money from the General Authority.
Moreover, a penalty of no less than six month imprisonment and a fine between EGP 100,000 and EGP 200,000 will be imposed on any employee of any of the authorities who shall assist participants in not paying their financial obligations under the Law.
Article 2 of the Law. ↩