Few official documents hurt as much as a pension determination decision that records fewer years of service than one actually worked – or a decision refusing a disability benefit, which states that the applicant's state of health “does not justify” what they have been living with for years. As a broker, I see that in such situations older and chronically ill clients believe two things: that there is nothing to be done against the authorities anyway, and that legal expenses insurance (legal protection insurance) is “no good for dealings with the authorities”, because that is what they have read about the limits on tax matters. The first is a mistake, and the second is only half true: several Hungarian legal expenses products treat social and social-security legal protection as a separate area, with its own rules. This article is about that area – what changed in legal remedies in 2020, what the policy conditions cover, and where the limits lie. The general limits on tax and administrative matters are discussed in the article on tax and administrative matters, and legal remedies following an inspection of a company in the article on remedies after an official inspection.
- Since 1 March 2020 there has been no appeal in social-security cases: a pension, sick-pay or disability decision can be challenged by an administrative lawsuit under the Code of Administrative Court Procedure (Kp.), and the statement of claim must be filed within 30 days of the decision being communicated.
- Several Hungarian legal expenses insurance products treat social legal protection and legal protection relating to the state social-security system (TB) as a separate area – one set of conditions, for example, defines it as proceedings concerning the insured person's social benefits and the application of the social-security legislation relating to them – typically with its own waiting period, and only for legal remedies against the first-instance decision.
- Legal expenses insurance covers the cost of the legal remedy – lawyer, statement of claim, medical expert – but not the benefit itself; the narrow list drawn up for tax matters typically does not apply to this area, but the exact scope is decided by the policy conditions.
What changed in 2020: no appeal, only a lawsuit
In matters of the state social-security system (TB) – pensions, sick pay, infant care fee and child care fee, accident-related benefits, benefits for persons with reduced working capacity – appeals were abolished from 1 March 2020. Under Section 116 of Act CL of 2016 on the Code of General Administrative Procedure (Ákr.), a first-instance decision can be appealed only if an Act expressly allows it; in TB matters this option was removed from the legislation, so the decision becomes final when it is communicated, and it can be challenged by an administrative lawsuit under Section 114 of the Ákr. Under Section 39 of Act I of 2017 on the Code of Administrative Court Procedure (Kp.), the statement of claim must be filed within 30 days of the decision being communicated, with the authority that issued the decision, and the case is decided by one of the regional courts that hear administrative cases. The practical consequence is serious: in the past, a decision could be contested with a simple appeal, even by a layperson; today the statement of claim is subject to strict content requirements, the court is bound by the relief sought, and an incomplete submission may be rejected. This change has increased the importance of social and TB legal protection: from now on, a legal remedy means legal work, which has a cost.
Social and TB legal protection in the policy conditions: a separate area, separate rules
Some Hungarian legal expenses policy conditions do not place social and social-security matters under administrative legal protection but describe them as a separate area. One Hungarian set of conditions, for example, defines social and TB proceedings as “legal proceedings relating to the application of the legislation on the insured person's social benefits and of the social-security legislation applicable to the insured person”, and gives as examples the case where “the social-security authority does not determine their pension correctly”, or where the government office has rejected an application by an insured person with reduced mobility for a car purchase subsidy. Another insurer's package even lists the benefits by name – old-age pension, widow's pension, family allowance, GYES (child care allowance), GYED (child care fee) – and one set of conditions from this same insurer sets a separate three-month waiting period for social and TB legal protection. Two rules recur in several sets of conditions, and both come to light when a case is reported. The first: cover typically applies only to legal remedy proceedings, not to the underlying procedure – the conditions quoted above state: “The insurer does not provide legal protection services in the underlying procedure (first-instance procedure); insurance cover extends exclusively to legal remedy proceedings against the first-instance decision.” In other words, the insurer does not provide a lawyer for submitting a pension claim or filling in the forms; it does for a lawsuit against an unfavourable decision. The second: the waiting period and the date on which the legal dispute arose matter here too – if the decision was made before the policy was taken out or within the waiting period, there is typically no cover; this is discussed in the article on when the legal dispute arises. How each set of conditions draws these lines differs from insurer to insurer: in some, the social area appears as part of administrative legal protection, within a narrower scope.
Why does the narrow list for tax matters not apply here?
Readers' fears stem from the restriction on tax matters, and they are not unfounded: policy conditions typically narrow tax legal protection to a few types of tax – for example, personal income tax, building and land tax, communal tax, vehicle tax – and exclude many administrative matters. But this list applies to the area of tax matters. In the example above, social and TB proceedings appear under a separate definition, with their own content, so a lawsuit against a pension or sick-pay decision is assessed not under the tax rules but under the social area. This does not mean that it is the same in all conditions – where social matters are not named, they are caught by the general exclusion of “administrative proceedings”. So the question to ask before taking out a policy is a single sentence: are social and social-security legal protection included among the services, and with what waiting period?
What does the insurer pay in a pension or disability lawsuit – and what not?
Where the area is covered, the insurer typically bears the costs of the legal remedy up to the limit and subject to the deductible: the lawyer's fee from drafting the statement of claim to the hearing, the court fee if one arises – in administrative lawsuits the fee typically does not have to be paid up front; the exact rule is laid down in the Act on Duties – and the cost of evidence. The latter is the key in disability cases: the complex assessment under Act CXCI of 2011 on the Benefits of Persons with Reduced Working Capacity can typically be overturned in court with the opinion of a forensic medical expert, and the expert's fee is the largest item. In pension cases, it is proving the missing years of service – witnesses, old employer records, requests to archives – that costs money. What legal expenses insurance does not provide anywhere: the benefit itself. The insurer does not make up the missing part of the pension and does not pay out the refused disability benefit; it only provides legal backing for the dispute. And as with every legal case, the prospects-of-success assessment applies here too: if the decision applies the legislation in force correctly – for example, the required years of service really are missing – the insurer may refuse cover on the grounds that the case has no reasonable prospect of success; how this works is described in the article on the prospects-of-success assessment.
Typical cases – and one that few people think of
The most common case is the refusal of a disability or rehabilitation benefit, or classification into a lower category than before following a review; the second is a dispute over the amount of a pension where years of service or earnings data are missing; the third is the refusal of sick pay or a demand to repay a benefit already paid. This last one is the little-known situation: if the authority orders you to repay a benefit received without a legal basis, that too is a decision, and the way to challenge it is again an administrative lawsuit – here legal expenses insurance may cover your defence. This area also includes the determination of widow's pensions and orphan's benefits; disputes over family support decisions (family allowance, GYES) are not social-security matters, but several sets of conditions bring them within social legal protection – this is decided by the list of benefits in the conditions. What these cases have in common is that the authority decides at the end of a procedure you cannot influence, the deadline is short, and the person concerned is rarely in a condition to write a statement of claim themselves. As a broker, I see that it is precisely this group of clients – people approaching retirement and the chronically ill – who least often ask whether cover for this exists.
What should you do when you have the decision in your hands?
First, check the date of the decision and the day it was communicated to you: the 30 days under the Kp. run from that day, and this deadline cannot be extended by asking the authority to amend its decision. If you have a legal expenses insurance contract, report the legal case on the insurer's own claims line before instructing a lawyer, enclosing the decision, the policy number and a short description of the background – under the policy conditions, this is how the insurer can decide on cover and on the lawyer. If the insurer claims that the social matter falls under the exclusion for administrative matters, ask for a written explanation citing the exact clause of the conditions; if a case gets stuck or is disputed, I help where I can, acting on your behalf, with interpreting the conditions – I do not provide legal representation. If you do not yet have a contract and your pension or a review is expected in the coming years, a calm period is a good moment to take out a policy: only then can the waiting period run out before the decision is made. The insurer pays only for what is an insured event under your contract – for social and TB legal protection, this means that the area must be named and the decision must fall within the period of cover.
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Sources
- Ákr. – Act CL of 2016 on the Code of General Administrative Procedure: Section 114 (administrative lawsuit), Section 116 (appeal only where authorised by an Act)
- Kp. – Act I of 2017 on the Code of Administrative Court Procedure: Section 39 (statement of claim to be filed with the administrative authority within 30 days of communication)
- Mmtv. – Act CXCI of 2011 on the Benefits of Persons with Reduced Working Capacity (complex assessment, disability and rehabilitation benefits)
- Tny. – Act LXXXI of 1997 on Social Security Pension Benefits
- HVG (5 March 2020): Appeals abolished in social-security cases – from 1 March 2020 only an administrative lawsuit
- Generali Juris legal expenses and liability insurance conditions (V.2.l: definition of social and TB proceedings, legal remedy proceedings only; V.2.h: narrow scope of tax matters)
- LegitiMo Jogvédelmi Biztosító – Classic legal protection special policy conditions (point 2: social legal protection, 3-month waiting period)
- LegitiMo Jogvédelmi Biztosító – VIP legal protection (social and TB legal protection: old-age and widow's pension, family allowance, GYES, GYED)
Related articles
- Tax and administrative matters: what legal protection covers – and what it doesn't
- After an administrative inspection: what would legal protection cover in a legal remedy?
- When does a legal dispute arise? The most important date for cover
- Waiting period: why it exists and how it counts in legal expenses insurance
