High level of contributory solidarity from employed work

40 Costa Rica – Best practice in adapting social insurance to independent workers Although in the past some agreements with undetermined terms have been signed, a maximum one year term is currently negotiated. During this period, it is not permitted to change the established contributions, even if the Board of Directors changes the contribution scales to be applied to the new affiliated organizations. For this reason, contributions are adjusted annually at the time the agreement is renegotiated. The agreement may be terminated with a three month notice by any of the parties subscribing it within the one year duration term. The role of the CCSS Board of Directors in this procedure is to establish general guidelines, to approve the increases in the contribution scales, and to settle force majeure disputes. Source: Durán-Valverde, 2009. An essential factor in the success of this model is the sense of ownership on the part of participant organizations, to the point that this collective insurance mechanism also represents a tool for strengthening social cohesion and organizational and political capacity for farmers and other groups organized into cooperatives and associations. In addition, the State participates through subsidizing the contributions paid by these groups. 7.2.5. Contribution portability with maintenance of rights between the workers registered as employed and those registered as self-employed, and vice-versa In view of the irregularity in received income, many independent workers are forced to switch not only between informal activities, but also between informal and formal economy activities. In order to compensate this interchange between employed and self- employed work, either informal or formal, CCSS has generated a mechanism to ensure independent workers portability in their contributions.

7.2.6. Decrease in transaction costs

It is known that the nature of independent work entails a perception of the economic world which is completely different from that of employed workers. Therefore, independent workers‘ relationship with social security institutions is also different. In its eagerness to register the largest possible number of independent workers in social insurance, CCSS has devised strategies to minimize the transaction costs linked both to contribution payments and access to benefits. The amount to be paid is detailed in a physical invoice which is periodically sent to the registered contributor, and which is a rights supporting document at the time of accessing health benefits. In turn, the corresponding payment may be made at CCSS facilities, at branches of the national financing system banks and cooperatives, at commercial establishments such as supermarkets or chemists, or, alternatively, online by debiting checking or savings accounts.

7.3. Challenges

Undoubtedly, the above described aspects for more details, see Annex 2 reflect CCSS innovative drive to achieve the registration of more medium and low income independent workers; however, as shown in figure 8, universality of contributory coverage has not been achieved, and remains one of the systems greatest challenges. In the case of health insurance, six out of every ten independent workers with contributory capacity contribute to this insurance, whereas for the Pensions Insurance IVM, this proportion falls to about 4. However, the greatest increases in coverage in recent years have occurred in this scheme.