The Pension Insurance Act covers old-age, disability and survivors (OASDI) benefits. The Social Insurance Contribution and State Employment Policy Premium Act provides for the collection of insurance premiums including contributions for OASDI, sickness and unemployment insurance. A worker who is subject exclusively to U.S. laws under Part II of the Agreement will be exempted, together with his or her employer, from contributions for Czech OASDI, sickness and unemployment insurance taxes.
When the Agreement was signed in 2007, Articles 2 and 7 included an exemption for U.S. workers covered under the Agreement from both Czech social security and health insurance contributions within its stated scope. However, effective January 1, 2008, the Czech Republic changed its laws on health insurance, in a manner that had the unintended effect of placing health insurance contributions outside the legal scope of the Agreement. As a consequence, workers covered exclusively under U.S. laws while working in the Czech Republic also became subject to the new law on Czech health insurance contributions when the original intent of the Agreement was to make them exempt from such contributions. When the U.S. became aware of this change in Czech law, the President had already transmitted the U.S.-Czech totalization Agreement to Congress for review. The Agreement subsequently became effective January 1, 2009. U.S. workers exempted from Czech social security taxes under the Agreement remained liable to pay Czech health insurance taxes. This result is inconsistent with the purpose of the totalization agreement to eliminate duplicate taxation as permitted by 42 U.S.C. 433 and 26 U.S.C. 3101(c).
Accordingly, the purpose of the supplementary agreement that entered into force on [date] is to exempt a worker subject exclusively to U.S. laws from contributing to the Czech health insurance system if he or she meets all the ordinary criteria for such an exemption. The Supplementary Agreement achieves this by placing the new Czech health insurance law, the Act on Public Health, within the stated scope of the U.S.-Czech Agreement.