Costa Rica requires 2 kinds of coverage for workers

Costa Rican labor code says that all employers must protect their employees with two different kinds of coverage: social security and workers’ compensation.

Social security, called seguro social in Spanish and known as “La Caja” in Costa Rica, covers the employee and the employee’s dependents for sickness, pregnancy, dental care, non-work-related accidents, etc. The cost of Caja protection is borne by employer and employee. (There is a payroll deduction, except in the case of minimum wage, when the employer has to pay 100 percent.) Social security is not handled by insurance brokers. In simple cases, employers deal with La Caja directly; in other cases, the employer hands the tedium over to his bookkeeper.

Workers’ compensation covers medical costs from work-related accidents and sickness, and the resulting downtime, as well as compensation if a worker should become incapacitated or die. The quotas are 100 percent paid by the employer. If an employer fails to protect his employees, he is responsible for paying what would otherwise have been covered by workers’ compensation. 

Coverage is provided solely by the government-owned National Insurance Institute (INS). It comes in two forms: domestic workers’ compensation (RTH) and normal workers’ compensation (RT).

Domestic workers’ compensation (RTH). INS provides two policy options. If your domestic arrangements do not conform to either, you should get a “normal” RT policy. The RTH options are: 

– One domestic employee (maid, servant, cook, housekeeper, etc., but not a guard or driver) up to full-time, plus one other person (gardener, handyman, etc.) for up to three days per month. Yearly cost: approximately $100.

–Two domestic employees up to full-time, plus one other person up to three days per month. Yearly cost: about $160.

As the paperwork and reporting requirements are easier, it’s convenient to conform as much as possible to the RTH policy. To obtain coverage, call your insurance broker, who will fill out an RTH application to be signed by the employer, with the names and ID numbers of employer and employees. The premium is paid up front and the coverage becomes effective right away. RTH can cover foreign workers, regardless of whether they are legal immigrants.

Normal workers’ compensation (RT). To obtain coverage, the employer should call his insurance broker, who will enroll him with INS. The employer must provide his employees’ names, ID numbers, salaries and job descriptions (one word: maid, guard, gardener, driver, etc.). INS will determine, according to the perceived risk, the percentage of the payroll that must be paid. Premiums are about 2 to 3 percent of payroll, usually paid yearly in advance. The employer must keep INS informed of hirings, firings and other relevant personnel information, and also send INS a copy of the payroll, on a special form, every month. This reporting can be handled by fax or email; ask your insurance broker to instruct you.

Both these coverages, Caja and workers’ comp, are mandatory. People sometimes seek to escape the paperwork by getting a medical policy for each of their employees. You can certainly do this, but it does not substitute the mandatory coverage, so you would be multiplying the paperwork and the expense.

The opinions and viewpoints expressed are those of the writer, whose purpose is to give the reader a better understanding of insurance in Costa Rica. For more information, contact David Garrett at 2233-9520 or david@unicencorredora.com.