Participation in the HCF
All employees working within the Republic of Palau are required to join the HCF program. Beginning October 1, 2010, employers began to withhold 2.5% of an employee's earnings every pay period. Employers transmit employee shares, along with a matching employer share of 2.5% to the Social Security Administration at the end of every quarter. Self-employed persons will contribute 5% because they are considered both an employee and employer.
Unlike SS contributions, there is no maximum taxable income that is subject to HCF contributions. Using the latest Quarterly Report Form, employers transmit HCF contributions to the SS office, following the same payment due dates for filing and paying Social Security contributions.
The employee's 2.5% contributions goes into his or her Medical Savings Account (MSA), while the employer's matching 2.5% share goes into the pooled account that funds the National Health Insurance (NHI).
Depending on whether or not you have employees, HCF contributions are reported and paid differently. Read more about how SS & HCF contributions are reported and paid for Businesses with Employees and Businesses without Employees.
Currently, only employed persons are required to join the HCF program. However, unemployed persons can also participate and have their own MSA or be eligible for NHI coverage. Here's how:
To voluntary deposit into an MSA:
Anyone can voluntary deposit into their own MSA or an MSA of another person. To do so, the minimum deposit required is $10.00 and any additional amounts may be contributed to an individual MSA without limitation.
Cash deposits will be available in the recipients' MSA the next business day, while check deposits will be available after 5 business days.
Your MSA is a savings account, so you can continue to use your MSA depending on your account funds availability. There is no penalty or interest if your funds reach a zero balance. However, if you are a designated beneficiary of other MSA, you may use them to settle your medical bills.
To voluntarily purchase NHI:
Individuals may voluntarily purchase National Health Insurance per quarter, based on the following amounts of premium per quarter for each effective date.
If you are an employer of a business without employees and would like to voluntarily purhcase NHI, then the amount you must pay to voluntarily purchase NHI is based on your reported quarterly gross revenue. This must be paid quarterly, following the same payment due dates for filing and paying SS & HCF contributions.
Only individuals who are currently insured can make late payments with interest. Late payments by individuals who are not currently insured are not allowed.
NHI coverage will begin after two consecutive quarters of payment.