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Financing

Kela receives most of its financing from the state budget. Financing is also contributed by wage and salary earners, self-employed persons, employers, municipalities and the Åland Islands government. The social security schemes administered by Kela are financed on a pay-as-you-go basis, which means that the expenditure for a given year is financed with the revenues collected in that same year.

This page brings together key information about Kela’s financing.

Financing of the benefit funds 

To finance benefit expenditures, Kela operates a National Pensions Fund, a Health Insurance Fund and a General Fund for Social Security, the last of which is used to finance the benefits that are not part of the pension or health insurance schemes.

The following chart illustrates Kela’s financing structure in 2022, consisting among others of payments by municipalities, health insurance contributions from employers, contributions by the insured to daily allowance and medical care expenditures, and unemployment insurance contributions.

Kela's funding in 2022. Municipal contributions €751 million e, employers' health insurance contributions €1,357 million €, daily allowance and medical care contribution €2,011 million, €369 million in unemployment insurance contributions, student health care fees and other income €, central government advances on benefits and operating expenses €12,115 million e.

The total expenditure of Kela’s benefit funds in 2022 came to EUR 16.9 billion. Benefit expenditure accounted for 96% and operating costs for 4% of that. In 2022, the state's share of the financing was 73%.

Twenty percent was derived from statutory contributions levied on insured persons and employers, 5% from payments by municipalities, and 2% from other income.

The benefit and administrative expenditures of the National Pension Insurance Fund are paid entirely out of state funds to the extent that they cannot be met with the yield on investments.

From the viewpoint of its financing, the National Health Insurance system is divided between an earned income insurance component and a medical care insurance component.

Earned income insurance comprises

  • sickness allowances (including infectious disease allowance),
  • allowances for parents,
  • rehabilitation allowances,
  • family leave compensations, and
  • compensations to employers and self-employed persons for the provision of occupational health services.

Earned income insurance is funded with a contribution from the state and with contributions paid by employers, wage and salary earners and the self-employed.

The following benefits are available under the medical care insurance scheme:

  • reimbursements for medicine expenses,
  • reimbursements for physician services and dental care,
  • reimbursements for travel costs,
  • reimbursements for examination and treatment costs, and
  • rehabilitation services.

The medical care insurance component is funded by the state, by wage and salary earners, by the self-employed, and by beneficiaries.

Fifty-two percent of the expenditure on earned income insurance (not including the additional contribution from self-employed persons, the state contribution and the family leave compensation funded by employers) is financed with the National Health Insurance contribution levied on employers, while 48% is financed with contributions towards daily allowances paid by wage and salary earners and by self-employed persons.

Persons earning less than EUR 15,128 per year (as of 2022) are exempt from paying the contribution towards daily allowances. The state funds that part of the costs of minimum-rate daily allowances and rehabilitation allowances which exceeds the allowance calculated on the basis of annual income. Further, the state funds 5% of otherwise insurance-funded sickness allowances and allowances for parents and an equal share of rehabilitation allowances.

The state also pays for certain expenses of the occupational health services for self-employed persons and agricultural entrepreneurs.

The financing of the National Health Insurance scheme is shared between the state (67% of benefit and operating costs) and the insured population (33%). However, the EU reimbursements provided under medical care insurance are financed entirely by the state and by foreign institutions. The state also funds all compensations in respect of COVID-19 vaccinations, which are included in the reimbursements for examination and treatment costs. The contribution percentages for the contribution to medical care insurance are determined annually, the basic rule being that the percentage for beneficiaries must be 0.97 percentage points higher than that for employees and the self-employed.

Most of the financing for basic unemployment allowances is provided by the Employment Fund. Part of the spending on labour market subsidies for the long-term unemployed, as well as most of the expenditure on child care allowances, is financed by municipalities. The Province of Åland finances the child benefits, general home care allowances, child maintenance allowances and interpreter services provided in the Åland Islands.

The financing of student health services is shared between the state (77%) and the students (23%). All other expenditures which cannot be met with the yield on investments are funded by the state. The municipalities are responsible for nearly half of the expenditure on social assistance payments, but the funds allocated to that purpose are remitted to Kela by the central government, with a corresponding reduction in the local government subsidies.

Click the link below to access Kela’s annual reports, which contain more detailed information on the benefit funds. Descriptions of the remaining two funds, the Service Fund (maintenance and development of the Kanta services) and the Pension Liability Fund can also be found in the annual reports.

Key indicators

With 130 customer service locations and 157 other service points, Kela operates throughout Finland. In 2022, there were a total 76.4 million log-ins to Kela’s online services and 0.6 million visits to customer service locations.

This is how Kela serves year 2022 in numbers. 130 customer service points, 157 citizen service centres, 85 remote service at Municipal Citizen Service Points, 21 remote service at other Municipal Citizen Service Points. Paid benefits approximately 16 billion e, identifications in the online service 76.4 million, visits at service points 0.6 million, letters sent 14 million, calls answered 2.2 million, online service's share of all applications 79.2%, number of direct reimbursements 37.3 million, electronic prescriptions 28 million, largest benefit expenses: national pensions 2,170 million, unemployment benefits 1,850 million, medical reimbursements 1,770 million, general housing allowance 1,570 million, child allowance 1,460 million, sickness allowance 1,220 million e. Personnel 8,590. Kela offers a national telephone service in Finnish, Swedish, Sami and English.In 2022, Kela’s total benefit expenditure came to about EUR 16 billion. The largest categories were national pensions, unemployment benefits, reimbursements for prescription drug costs, general housing allowances, child benefits and sickness allowances.

Last modified 31/10/2023

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