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Issues With the New CAJA Rates for Migrants

How the changes in the regulation for the CAJA insurance affects foreign nationals living in Costa Rica, and what we're doing to defend them

The Costa Rican Social Security Fund (CCSS or CAJA), in San José

As noted in an article we recently published, there are new Costa Rican Social Security Fund (better known as the CAJA) rates that apply for residents in Costa Rica who sign up after March 16, 2022.

This time, we are going to share some issues we have noted with this regulation and how it affects the people who already have obtained residency or are in the process of applying for it.

For further details, check out our past publication regarding the new CAJA rates for migrants. We will also post more articles about this in the upcoming weeks, since it is a matter our legal team is analyzing profoundly.

What is the main change in CAJA rates?

The significant change with the regulation is creating the requirement for certain foreign nationals (immigrants) with residency in Costa Rica to pay for additional insurance. Specifically, the additional insurance refers to making contributions to the pension system.

Previously, Immigrants were only required to pay the portion of the CAJA fees only covering for health care services, which is called Insurance for Illness and Maternity (Seguro de Enfermedad y Materninad or SEM for its acronym in Spanish).

However, the recent modification is requiring immigrants to pay for the insurance portion which covers pension or disability income (Invalidez, Vejez y Muerte or IVM for its acronym in Spanish).

So, this is the main change. Before, immigrants were not required to pay for IVM — now, they are.

Who is actually affected by this change?

We can review this from two perspectives. On the one hand, whether it affects people who already have residency, and on the other hand, whether it affects all categories of residency.

Regarding the former, people who already have their residency and DIMEX cards on hand are not affected by this change. Conversely, it affects all people who have not completed the residency process and do not have their DIMEX cards, and thus have not yet signed up for the CAJA insurance for residents.

The regulation does not establish (and thus there is no clarity of) whether people who will renew the residency in the future will see their CAJA fees increased during the process of renewal of CAJA benefits. This is a subject to be explored.

Regarding the latter, according to regulations it should only affect a few categories of residency, not all. However, due to the lack of clarity of the language, it can be inferred that the intention is to apply it to all categories of residency.

Section 1 of the regulation states that it is applicable to “all Costa Ricans who reside in the national territory, or rentistas and pensionados who do not work directly or indirectly”. These people can register as voluntary registrants.

Now how do we define rentistas, pensionados or voluntary registrants?

According to the regulation:

  • A pensionado: a person who does not work (either as self employed or as an employee) and receives a pension from a foreign pension system.
  • A rentista: a person who does not work (either as self-employed or as an employee) and receives income.

As noted above, there is no clarity. While they initially state in section one that these regulations should apply to Costa Rican rentistas and pensionados, later on in Section 16 is established that the regulation is applicable to all migrant people (immigrants) who do not work in Costa Rica.

The issue with this is that there are several other categories of residents who are not pensionados or rentistas who do not work in Costa Rica, or do not have an income in Costa Rica, who are considered immigrants under the language of the regulation.

Considering the language of the regulation, we can establish that it is applicable to pensionado (retired) and inversionista (investor) residents, and the inconsistent language may result in also being applicable to other categories such as rentista residents. 

A primary healthcare facility from the CAJA in Nicoya, Guanacaste

A primary healthcare facility from the CAJA in Nicoya, Guanacaste

Specific issues with the regulation

A. Retroactivity

As noted above, this new regulation is applicable to people who do not have residency yet and it shall not affect the people who already have residency and DIMEX card. We must go a step further.

The registration with the CAJA is a requirement for the residency process. It is not possible to complete the residency process and obtain the DIMEX unless foreign nationals are registered with the CAJA. Thus, this makes the CAJA requirement an intrinsic part of the residency process.

This new regulation (if at all) should be applicable to people who initiate the process of residency since March 16, 2022 (first day of validity of the regulation). Conversely, it should not be applicable to people who have initiated the residency process prior to March 16, 2022.

Thousands of foreign nationals have come to Costa Rica and decided to apply for residency under the expectation that certain regulations will be applicable to them.

At the moment we see how many people who are finishing the residency process which they started a long time ago (considering how long the residency process takes and how long it takes the Immigration Department to grant appointments for filing due to the Covid-19 pandemic) are hit by the surprise that their CAJA fees have almost doubled from what was initially expected.

B. Reasonability

Another significant issue is whether the requirement to pay the IVM insurance is reasonable for foreign nationals.

As noted, the IVM is a pension for disability and retirement for old age. Is the CAJA going to pay pension to foreign nationals with residency (as defined in the regulations) who make contributions to the IVM? The answer is no. How come?

Well, in order to receive a pension from the CAJA, the contributor (in this case a person with residency) must have made a minimum of 180 monthly installments, which adds up to fifteen years of contributions.

So, if we apply this to a person who obtained residency as a pensionado we must imagine a person who currently receives a government pension from abroad which requires to be at least 65 years old to qualify for that government pension.

Therefore, we are telling this person that they must pay into a pension system in CR for 15 years for them to start collecting a pension when they reach 80 years of age.

That is not reasonable.

C. Equality

As noted in previous occasions, foreigners have protections under the Costa Rican Constitution, which demands for them to be treated equally as Costa Rican nationals.

Thus, these protections and the right to equal treatment extend to many areas of the Costa Rican life and legal system. When it comes to the topic at hand being the modification of the regulations for the registration of certain immigrants, we spotted some issues affecting the equal treatment.

Namely: Right to work and income-based fees from the CAJA. In this instance, Costa Rican nationals are allowed to enroll with the CAJA as voluntary registrants. The CAJA fees are going to be based on their income, but they are allowed to work.

Consider that the objective of the IVM is to supplement income (in the manner of a pension) when people stop working, by receiving a pension. This is allowed to Costa Rican nationals, but foreign nationals are required to bear the financial burden without being allowed either to work nor to receive the pension.

This is not equal treatment; it puts foreign nationals at a disadvantage when requiring to bear the financial burden with no access to economic activity or the possibility of having access to the benefits which is the purpose of the IVM system.

D. Access to healthcare

This is not an exhaustive list, but last we will like to address the issue regarding the ability of receiving healthcare services for foreign nationals.

Among other things, the new regulations include the limitation to receive medical assistance within six months of registering with the CAJA.

Under the Costa Rican Constitution, access to healthcare is a fundamental right and as such it cannot be limited in such manner. This type of limitation is not applicable to other CAJA registrants such as people on payroll.

The sole purpose of healthcare coverage of CAJA is to provide medical assistance when people need it.

CAJA is not a for profit corporation, and the objective of the organization is not to generate money — rather, it is to provide healthcare (and income security) to the population at large.

I understand that for many decades the Costa Rican government and the population at large have been concerned about the impact that immigrants have in the healthcare system (and other public services such as education and judicial services), but the solution is not to generate undue burdens and discriminatory practices to a section of the population.

Rather, the CAJA must focus on collecting the money owed by the largest debtors to the system, particularly the government. The Costa Rican government owes billions of colones (hundreds of millions of dollars) to the CAJA, which are not being paid.

The Costa Rican Social Security Fund (CCSS), known as the CAJA

Headquarters of the Costa Rican Social Security Fund (CCSS), known as the CAJA, in San José

Next Steps

We have a commitment to protect the rights of our communities as contemplated in the Constitution. As noted, we have identified some legal issues with the new regulations, and we are currently evaluating the legal avenues we can take to address these challenges.

Certainly, we cannot guarantee success, but as usual, we will give it our best shot. Sometimes we succeed, many other times we learn better.

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rvalverde@outlierlegal.com

Attorney and Entrepreneur with more than 15 years experience in: immigration law in the US and Latin American countries including Argentina, Chile, Colombia, Brazil, Costa Rica and Panama. In addition, Rafael has extensive experience in Business Law, Estate Planning, and Real Estate. Lastly, Rafael has developed experience in people management, talent development and business development.

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11 COMMENTS
  • Ellen Saling y Robert Linton April 9, 2022

    Thank you very much! I feel like I always learn important information from your site and especially when Rafael writes the blog. Keep up the great work, we appreciate you!
    Ellen and Robert at Lago de Arenal.

  • Jodie Cook April 14, 2022

    a big shout out to Outlier for protecting the rights of foreign nationals ~~~

  • Danilo April 20, 2022

    Thank you so much for your informations. So did i understand right that the expats should pay CAJA & IVM to the money we generate outside of CR – but are still not allowed to work in CR ? Thank you for taking care of the equality 🙂

  • Tarin O'Day May 19, 2022

    Any recent updates with this issue? Today is Thursday May 19,2022

    • outlierlegal May 19, 2022

      Hello! No new updates regarding this regulation. We’re still working to tackle this issue. Thanks for reading!

  • Yves Paul-Hus June 20, 2022

    Many thanks Rafael for the information summarizing the issues with this new CAJA regulation. It does seem illogical to have to pay the IVM for pension retirement when we already are receiving a monthly pension from our country of origin !
    In your discussions with the Costa Rican authorities you should also present the arguments that this new regulation and increase cost will incite many foreigners to go to Panama where the access to public healthcare is much more affordable and flexible:
    https://panamarelocationtours.com/health-insurance-options-in-panama

  • Peter July 2, 2022

    Any new updates on this? We are in the middle of our immigration. Can you explain the exact difference between Rentista and Inversionista?

  • Sally January 5, 2023

    Did Caja increase again Jan 2023. Please advise. I go to pay Caja on line with banco Costa RIca, and the total is 12000 colones from what is required on the documents received for paying Caja in person. Confused. If Gov is going to raise CAJA with no notifications each year, I’m done with paying any CAJA payments and I’ll fly home every 3 months or look for another country like Panama. Please explain if this has happened, I can not find anything anywhere indicating the discrepancy between what I’ve been paying and what is being requested if I pay on line.

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