krfacts October Edition 2021 Supplementary benefits and kinship benefits
In addition to AHV, IV and helplessness allowances, the social foundation of our state also includes supplementary benefits (EL for short). If the pension income and assets are not sufficient to cover the minimum living costs, it is necessary to check whether there is a claim for supplementary benefits.
However, if the supplementary benefits are not sufficient or there is no entitlement, there may be a claim for social assistance. When examining applications for social assistance, the social assistance authorities have the opportunity to clarify whether relatives are available who live in favourable circumstances and could provide financial support before social assistance is paid. This is because those who can no longer earn their own living are legally entitled to support from their close relatives under certain conditions.
Supplementary benefits: When is there an entitlement?
Anyone whose pension income and assets are not sufficient to cover minimum living costs is entitled to supplementary benefits. However, personal and economic requirements must be met for this. A calculation is made in each individual case and the recognised expenses are compared with the eligible income. The difference corresponds to the annual supplementary benefits. A distinction is made here as to whether a person still lives at home or in a home/hospital.
For persons living at home, recognised expenses include a lump sum for general living expenses (food, clothing, taxes, etc.), rent (up to a defined maximum, depending on the size of the household and the region of residence) and health insurance premiums for compulsory health insurance up to the maximum applicable average premium.
The following are taken into account as income: AHV/IV and pension fund pensions and assets. However, only those whose assets are less than CHF 100,000.00 as a single person or CHF 200,000.00 as a married couple are entitled to supplementary benefits. However, owner-occupied residential property is not included in the calculation, whereas holiday homes or rented properties are. In addition, when calculating the actual entitlement, part of the assets, the so-called tax-free amount, is not taken into account. This amount is used to cover other personal expenses. It is CHF 30,000.00 for individuals and CHF 50,000.00 for married couples.
On the other hand, the assets that a person voluntarily renounces are taken into account. A renunciation of assets is assumed if a person has renounced assets either without a legal obligation or without equivalent economic consideration. This can be, for example, a gift or an advance inheritance to descendants. Expenditure of more than ten percent of the assets per year in the case of assets over CHF 100,000.00 or of more than CHF 10,000.00 per year in the case of assets under CHF 100,000.00 is deemed to be a voluntary renunciation. It is important to note that the time of the renunciation of assets is irrelevant, as no limitation period can apply. The offsetting of the waiver of assets is therefore unlimited in time. However, the amount to be offset for assets that have been waived is reduced by CHF 10,000.00 per year. This circumstance must be taken into account when planning the estate.
Supplementary benefits are then calculated on the basis of the difference between expenditure and income. Supplementary benefits must be applied for from the competent cantonal office in the canton of residence and are paid out monthly once they have been determined. In addition, illness and disability-related costs can be reimbursed (e.g. dental treatment and medically prescribed cures).
Reimbursement of supplementary benefits
Since 01 January 2021, supplementary benefits that were lawfully drawn in the last 10 years before the death of the deceased must be repaid by the heirs from the estate if the estate amounts to more than CHF 40,000. In the case of married couples, an obligation to repay arises only from the estate of the second deceased, provided that the conditions are still met. Benefits paid out after 01 January 2021 are affected.
This new reimbursement obligation may affect heirs of real estate in particular. If the inherited property exceeds the value of CHF 40,000.00 and the other conditions are also met, they must repay any supplementary benefits received from the inheritance from 2021 onwards. The private assets of the heirs are exempt from the obligation to repay. This issue must be taken into account in estate planning.
This reimbursement obligation has led to a system change in Swiss pension provision. Supplementary benefits were previously considered a constitutional entitlement; they were not welfare or social assistance. With this change, legitimately drawn social security benefits must be reimbursed for the first time.
Relative support and its increasing importance
Under the Swiss Civil Code, anyone living in favourable circumstances is obliged to provide financial support to relatives in the ascending and descending lines who would be in need without assistance. This applies in particular to adult children vis-à-vis their parents and grandparents and vice versa. There is no obligation to provide support for siblings.
This obligation to provide support is examined if, in addition to other pension income, supplementary benefits are no longer sufficient to cover living requirements and social assistance benefits have to be claimed. However, it only affects those who live in favourable circumstances themselves. According to the case law of the Federal Supreme Court, a person lives in favourable circumstances if his or her overall financial situation enables him or her to lead a prosperous lifestyle.
In most cases, when assessing such an obligation to support on an individual basis, the authorities refer to the Guidelines for the Design and Assessment of Social Assistance issued by the Swiss Conference on Social Assistance (SKOS Guidelines). These are considered a rough guide, but it should be noted that they are not legally binding on the authorities and courts. According to these guidelines, a person who has a taxable income of more than CHF 180,000.00 as a married couple plus a consumption of assets and of more than CHF 120,000.00 as a single person, plus a supplement of CHF 20,000.00 per child, lives in favourable circumstances. For the consumption of assets, an allowance of CHF 500,000.00 for spouses and CHF 250,000.00 for singles, plus a surcharge of CHF 40,000.00 per child, is deducted from the taxable assets. The remaining amount is converted into an annual amount, taking into account the average life expectancy, which is added to the taxable income for the purpose of checking whether the above limits are exceeded. However, the circumstances of each individual case must be examined in detail.
A claim for relative support takes precedence over a claim for social assistance. Of course, the authority may claim from the obligated persons a maximum of the amount that it itself pays out as social assistance to the entitled person. However, the social authorities cannot determine the support contribution by means of an order. If no voluntary contribution can be negotiated on a negotiated basis, the authorities must sue for the relative's support in court. Although the conditions for kinship benefits are rather strict and the cantonal differences in application have so far been relatively large, it is noticeable - possibly also due to the increased entry thresholds for supplementary benefits - that more and more municipalities are checking whether the condi-tions for kinship benefits are met.
Our experts will be happy to answer any questions you may have about supplementary benefits and kinship benefits.