Lithuania proposes health insurance budget increase and sick leave tax

The Lithuanian Ministry of Health has registered a draft budget for the Compulsory Health Insurance Fund (PSDF) for 2027, projecting a nearly 13 percent increase to approximately 4.86 billion euros. This growth is intended to fund healthcare services and reduce patient waiting lists.

As part of the proposal, the Ministry suggests taxing payments made for the first two days of sick leave. Currently, these initial days are paid by employers, while the Social Insurance Fund (Sodra) covers subsequent days. The proposal seeks to apply a 6.98 percent PSD contribution rate to these payments for employees, politicians, civil servants, and military personnel. This measure aims to implement a solidarity principle, ensuring all recipients of sick leave payments contribute to the health insurance system. Officials estimate this change could generate an additional 7.5 to 8 million euros for the PSDF budget annually.