In Costa Rica, employers are obligated to ensure that all their employees are registered with the Costa Rican Social Security Administration (Caja Costarricense de Seguro Social (CCSS)). This includes both full-time and part-time workers across all sectors. The CCSS is a critical institution in Costa Rica, providing health and pension benefits to the country’s workforce. Here, we’ll delve into these obligations and illustrate the process using the example of a caretaker on a property earning 400,000 Colones per month.
Understanding Employer Contributions to the CCSS
Employers must contribute to three main categories on behalf of their employees: health insurance, pension (both contributory and non-contributory). The rates for these contributions are set by the CCSS and can vary. Generally, the total contribution is a percentage of the employee’s gross salary, with specific portions allocated to each category. Also, keep in mind that separately from your CCSS obligations you will also have the obligation to insure your worker with a worker’s compensation policy with the Instituto Nacional de Seguros.
Health Insurance (SEM): This covers medical care, maternity care, and illness benefits. Employers typically pay a percentage of the employee’s salary towards this insurance.
Pension (IVM – Invalidez, Vejez, y Muerte): This contribution goes towards the employee’s retirement fund, disability, and survivor benefits.
Example Breakdown: A Caretaker Earning 400,000 Colones per Month
To provide a clear understanding, let’s break down the monthly contributions for a caretaker with a monthly salary of 400,000 Colones.
Health Insurance (SEM): The employer’s contribution rate is typically around 9.25% of the gross salary. For our caretaker, this would be 37,000 Colones per month.
Pension (IVM): The contribution rate for the pension is generally about 5.08% for the employer. Thus, for a salary of 400,000 Colones, the employer would contribute approximately 20,320 Colones.
Therefore, the total monthly contribution from the employer side for a caretaker earning 400,000 Colones would be approximately 57,320 Colones.
In addition to the Health Insurance (SEM) component and the Pension (IVM) portion there are also charges for other government institutions that total 7.25% for the Employer. There are mandatory contributions to fund Banco Popular, child welfare (Asignaciones Familiares) , public assistance (IMAS), and trade schools (INA).
Finally, the Employer will also have to contribute to the Law of the Protection of the Worker which is another 4.75% that the Employer must pay. That is for funding Banco Popular, Employee Labor Capitalization Fund, Complimentary Pension Fund, and the National Insurance Institute. The totals would look as follows:
It’s important to note that these rates are subject to change, and employers should consult the CCSS for the latest contribution rates. You can calculate the exact amounts with the CCSS online calculator available here. https://www.ccss.sa.cr/calculadora
Based on that calculator and our 400,000 per month Employee wage the total montly due to the C.C.S.S. for that Employee would be 149,360 Colones. Of that amount, the Employer must contribute 106,680 and the Employee 42,680.
Employer Registration and Payment Process
Employers must first register themselves and their employees with the CCSS upon the commencement of the employment relationship.
This involves submitting the necessary documentation and information about the employee. Subsequently, monthly contributions should be made through the CCSS’s online platform or at a bank authorized to collect payments on behalf of the CCSS.
As an employer, you are required to register your employees within eight days of their employment commencement. Registration can be completed in person at the CCSS office, although the preferred method is through their online platform. For online registration, you must designate a bank account to enable the CCSS to automatically deduct the necessary payroll taxes. These deductions will be applied directly to the payroll, with payments automatically recorded and reported in the Centralized Collection System (SICERE).
Conclusion
Compliance with the CCSS’s regulations is mandatory for all persons who hire employees in Costa Rica. Failure to do so can carry significant fines and the CCSS can also sue you for any back payments that were not made. Employers should stay informed about the current rates and ensure timely and accurate payments to the CCSS
