Government proposes reform of social assistance – seeks to impose stricter requirements

The reform aims to clarify the status of social assistance as a last-resort form of financial support. As such, more emphasis would be placed in the future on customers’ obligation to first apply for benefits that take precedence over social assistance, such as unemployment benefits, housing allowance, student financial aid and disability benefits.

If the proposal passes into law, the basic amount of social assistance will be reduced by 50% if the customer does not apply for the primary benefits they are likely entitled to within one month. Before Kela reduces the basic amount, the customer will be given the opportunity to explain why they think the basic amount should not be reduced or why it would be unreasonable for Kela to reduce it.

The proposal also aims to make the obligation to apply for full-time work stricter. This would be achieved by expanding the current obligation to register as a jobseeker looking for full-time work to also apply to, for example,

• persons who work under 30 hours per week
• students who do not depend on the primary benefits available to students for their living, such as student financial aid or rehabilitation allowance
• self-employed persons whose income from self-employment is not at least equal to labour market subsidy
• persons who struggle to a significant degree with life management but who have not been found unfit for work
• persons who are taking care of a child over the age of 3 at home without being paid child home care allowance.

If a customer does not register as a jobseeker looking for full-time work within one month despite being told to do so, Kela will reduce the basic amount of their social assistance by 50%.

The basic amount could also be reduced if ?Kela? stops paying unemployment benefits to the customer because a sanction has been imposed on them. The basic amount included in the customer’s social assistance would be reduced by 20% in the first month and by 40% in subsequent months up until they start being paid unemployment benefits again. Learn more about when Kela can reduce the basic amount before the reform.

One of the most important goals of the reform is to achieve savings in state finances. In order to reach this goal, the Government plans to cut the basic amount included in social assistance by 2–3% for all persons over the age of 18. For example, for a person aged 18 or over who is living alone, the cut would amount to a EUR 17.80 reduction in the basic amount of their social assistance when calculated at the 2025 rate. Read more about the basic amount of social assistance.

Another measure planned for the social assistance reform is the introduction of a 5% out-of-pocket payment to acceptable housing costs. This is expected to cut expenditure on social assistance by EUR 20 million. According to the proposal, ?acceptable housing costs would also be established for each group of municipalities in the future instead of for each municipality separately?. Learn more about the housing costs recognised under the social assistance scheme.

The proposal also states that, going forward, what counts as necessary healthcare and medicine costs in terms of social assistance would be examined more clearly based on generally accepted medical care practice and research-based evidence.  In addition, cost effectiveness would be taken into consideration as a factor for new or particularly expensive medicines. Learn more about what counts as acceptable healthcare and medicine expenses in social assistance.

If the proposal enters into law, all earnings and financial assistance, no matter how small, will affect how much social assistance Kela will pay to recipients over the age of 18. This means that Kela will stop applying the earned-income allowance (ansiotulovähennys) of EUR 150 that has so far been deducted from earned income or income from self-employment when calculating social assistance for persons over the age of 18. A corresponding exempt amount has already been abolished from unemployment benefits and housing allowance. The abolishment of the earned-income allowance is estimated to reduce social assistance expenditure by approximately EUR 20 million.

The aim is also to have it written in law that any income received on the last business day of the month will be taken into account as income for the following month as that is when it can actually be used. This would also be the case in situations where the customer has not applied for social assistance for the month in which the income is paid to them but rather for the month after. Read more about how income and assets affect social assistance.

Currently existing legislation does not contain any provisions stating when Kela can stop paying social assistance. As such, the reform seeks to introduce provisions to legislation that will allow Kela to stop paying social assistance for example if the customer moves to another country, finds work or passes away.

This change would also allow for Kela to grant or deny, where necessary, social assistance for a period longer than one to two months if the customer’s situation is not expected to change. The change would introduce a higher degree of predictability to the customer’s life. It would also bring relief, for example, to low-income customers who now have to apply for basic social assistance each month despite knowing it will be denied because they need the denial to be able to get supplementary social assistance from their wellbeing services county. Customers would still be able to appeal against long-term decisions, and the payment of their benefit could still be stopped if necessary.

In terms of the payment of social assistance, the proposal seeks to introduce an amendment that would allow the payment of social assistance directly to the landlord in situations where Kela has agreed to cover the customer’s rental security deposit as part of their social assistance. This change is intended to ensure regular rent payments and the permanence of the customer’s housing.

The reform seeks to improve the exchange of information between different authorities such as Kela, the wellbeing services counties, employment services and the Finnish Immigration Service. The government proposal states that customer data must be able to flow between different authorities electronically and securely. Data protection requirements must not prevent different authorities from gaining an overall understanding of the customer’s situation.

Kela can ask financial institutions to give information that is necessary for Kela to decide on the customer’s social assistance if Kela cannot get this information through other channels and Kela has reason to doubt the veracity of the information the customer has provided to Kela. If the proposal passes into law, Kela can submit this kind of information request to a financial institution in the future without the need for a legally binding decision. It would be enough for Kela to let the customer know about the information request in advance. This is already the procedure Kela follows for many other benefits, such as general housing allowance and unemployment benefits. Learn more about submitting bank statements when applying for social assistance.