Am I subject to the obligation to repay supplementary benefits?

Like a specter of dread, the obligation to repay supplementary benefits has been swirling in the media for more than a year. But how "strict" is this new regulation, which has been in effect since January 1, 2021? Am I affected by it?

With the reform of the Federal Act on Supplementary Benefits (EL) and its entry into force a week ago, the supplementary benefits have been "streamlined": Moving forward, assets will be more heavily considered, introducing a threshold for entry and reducing the exemption amounts. This reflects the newly introduced obligation for heirs of a recipient of supplementary benefits: “Where there is money, the state should not be entitled.”

Greater Consideration of Assets and Income

From now on, individuals will only be entitled to supplementary benefits if their assets are below the relevant asset threshold (CHF 100,000 for singles, CHF 200,000 for couples, CHF 50,000 for children). If assets are below this limit, they (along with income) will only be partially considered when calculating the actual entitlement to supplementary benefits. The so-called exemption amount does not play a role in this calculation. As of January 1, 2021, the exemption amounts are lower: CHF 30,000 instead of CHF 37,500 for singles and CHF 50,000 instead of CHF 60,000 for couples.

Furthermore, the calculation of supplementary benefits will also include assets that a person has voluntarily waived. “Voluntarily” in this context means that assets are relinquished without a legal obligation and without an equivalent consideration. The gift of a property from parents to their descendants typically represents a voluntary waiver of assets. Generally, asset transfers of CHF 10,000 per year (for assets below CHF 100,000) or 10% of assets above CHF 100,000 are still accepted.

The income of the spouse of the recipient of supplementary benefits will also carry more weight: From now on, 80% will be considered instead of the previous two-thirds.

Repayment Obligation of Heirs

If you inherit and the deceased was receiving supplementary benefits, you will have an obligation to repay:

• The supplementary benefits received in the 10 years prior to death and from January 1, 2021,
• Up to a maximum of the estate value over CHF 40,000.

Example:

If your mother passes away in December 2021 after receiving supplementary benefits for 14 years and leaves you as the sole heir CHF 70,000, you will need to repay the supplementary benefits received since January 1, 2021, up to a maximum of CHF 30,000.

Important to Know:

• For couples, the repayment obligation of heirs arises only upon the death of the other spouse.
• Real estate will be considered at its market value.
• The compulsory share may be violated by the repayment obligation.
• The authority must issue an order for repayment through a ruling. After the ruling becomes final, repayment must occur within three months. If heirs sell property to repay, repayment must occur within one year or no later than 30 days after the transfer of ownership.

When Do the New Rules Apply?

If you are currently receiving supplementary benefits, you will have a transition period of up to three years during which your previously received supplementary benefits will not be reduced or revoked due to the reform. Adjustments will occur on January 1, 2024.

Additionally, the repayment obligation for heirs only applies to supplementary benefits that have been granted since January 1, 2021.

Conclusion

As of January 1, 2021, the requirements for supplementary benefits have been tightened. As an heir, you may be potentially subject to the repayment obligation if the deceased received supplementary benefits from January 1, 2021, onward.

Often, parents consider transferring their self-occupied property to their descendants during their lifetime. Regarding the entitlement to supplementary benefits, nothing fundamentally changes (apart from the thresholds and lower exemption amounts): Because the self-occupied property of the supplementary benefits recipient is considered at its tax value, while the gifted property (as a voluntary waiver of assets) is considered at its market value, the entitlement to supplementary benefits is typically reduced or may even cease. However, concerning the repayment obligation for heirs that has been in effect since January 1, 2021, the lifetime transfer of assets to descendants may gain attractiveness: If the estate ultimately amounts to less than CHF 40,000, the repayment obligation generally does not apply. If there is a potential repayment obligation for supplementary benefits, this must be accounted for in the estate inventory by the executor or the heirs' representative.

Lucerne, January 8, 2021

Reto Marbacher