Annual Health Insurance Contribution Settlement on a Lump-Sum Tax

At the end of the fiscal year, ZUS recalculates the total health insurance contributions paid by an entrepreneur over the course of the year, based on their annual income.

For all months in which the contributions paid were lower than the health insurance contribution due in December, ZUS will calculate the difference. The entire difference must be paid by March 20, 2023.

The recalculations are performed by ZUS. The exact amount owed will be provided to the entrepreneur by their accountant after the fiscal year closes (expected by the end of February).

After completing a full calendar year of business activity, entrepreneurs will have the option to pay health insurance contributions based on their income from the previous year (i.e., paying a fixed amount equivalent to the contribution rate calculated for the prior year’s income).

This will be an option, not an obligation! At the beginning of the year, entrepreneurs on a lump-sum tax can decide whether to pay health insurance contributions based on the previous year’s income or the current year’s income.

Below is a detailed example to help entrepreneurs estimate the amount they may need to pay.

Example

Entrepreneur Jan Kowalski (on a lump-sum tax) pays health insurance contributions based on his income for the year.

Up until March 2022, his cumulative income did not exceed PLN 60,000, but by October, it had exceeded PLN 300,000. How will the annual settlement of his health insurance contribution be calculated?

Mr. Kowalski’s contributions were as follows:

• January 2022 – PLN 335.94
• February 2022 – PLN 335.94
• March 2022 – PLN 559.89 (income exceeded PLN 60,000 threshold)
• April 2022 – PLN 559.89
• May 2022 – PLN 559.89
• June 2022 – PLN 559.89
• July 2022 – PLN 559.89
• August 2022 – PLN 559.89
• September 2022 – PLN 559.89
• October 2022 – PLN 1,007.81 (income exceeded PLN 300,000 threshold)
• November 2022 – PLN 1,007.81
• December 2022 – PLN 1,007.81

Throughout the year, Mr. Kowalski paid a total of PLN 7,614.54 in health insurance contributions:

(2 x PLN 335.94) + (7 x PLN 559.89) + (3 x PLN 1,007.81) = PLN 671.88 + PLN 3,919.23 + PLN 3,023.43 = PLN 7,614.54

Since Mr. Kowalski’s annual income exceeded PLN 300,000, his monthly contribution rate for the year is now PLN 1,007.81. In other words, the total contributions for the year should amount to:

PLN 1,007.81 x 12 months = PLN 12,093.72

This results in an underpayment of PLN 4,479.18:

PLN 12,093.72 – PLN 7,614.54 = PLN 4,479.18

Key Insights

This example illustrates the potential financial obligations an entrepreneur may face at the year-end settlement. However, the exact amount due will only be confirmed after the fiscal year closes.

Understanding the procedure for the annual settlement and having the flexibility to choose the optimal method of paying health insurance contributions are crucial elements of financial responsibility and stability for any entrepreneur operating on a lump-sum tax basis.