Framework Law for the Social Protection System

PURPOSE.- The present Law, in compliance with the Constitution of the Republic, has as its purpose to create the legal framework for public policies on social protection, in the context of conventions, principles and best national and international practices that govern the matter; in order to allow inhabitants to achieve, in a progressive and financially sustainable manner, dignified coverage through social promotion, prevention and management of the risks inherent to human life, ensuring medical care, protection of means of subsistence and other necessary social rights for the achievement of individual and collective well-being.

DEFINITIONS.- For the purposes of this Law, the following definitions are adopted:

• 1)

  WORK ACCIDENT: Any unforeseen and sudden event that occurs by cause or on the occasion of work and that produces death or organic lesion or functional perturbation, permanent or temporary, immediate or subsequent to the worker(s). Likewise, accidents that occur during the execution of orders of the worker(s) or by extension of his labor under his authority or those occurring on the usual route between the domicile of the worker(s) and the workplace or vice versa, are considered work accidents, provided that such course was not interrupted or altered by causes unrelated to work.

• 2)

  ADMINISTRATORS OF PENSION AND UNEMPLOYMENT INSURANCE FUNDS: All financial institutions that within the framework of the present Law or the Law on Administration of Pension and Unemployment Insurance Funds, are authorized, regulated and supervised by the National Commission of Banks and Insurance (CNBS), to provide such service.

• 3)

  HEALTH SERVICE ADMINISTRATORS: Entities that may be public, mixed, private, community or solidarity-based, that are certified by the Honduran Institute of Social Security (IHSS), for the administration and results-based management of a Network of Health Service Providing Units, as mandated by this Law.

• 4)

  GUARANTEED SET OF HEALTH BENEFITS AND SERVICES: All programs, interventions, benefits and other health services of promotion, prevention, care, rehabilitation and support, defined by the State Secretariat for Health through the National Health System that articulates health demands and needs, which the insurance pillars must guarantee gradually and progressively to their beneficiaries, through the National Health System.

• 5)

  SOCIAL DEVELOPMENT: Permanent process of improvement in levels of social well-being, achieved through equitable distribution of income and eradication of poverty, observing increasing indices of improvement in nutrition, education, health, housing, environment and administration of justice in the population.

• 6)

  ACQUIRED RIGHT: The benefit obtained by an affiliate of a Pension Institute, including those granted to his beneficiaries, once all legal requirements have been met.

• 7)

  OCCUPATIONAL DISEASE: Any pathological condition derived from the continued action of a cause that has its origin or reason in work or in the environment in which the person is obliged to provide his services, which causes incapacity or functional perturbation, permanent or temporary, in accordance with the Table of Occupational Diseases established for such purposes by the Executive Branch, at the recommendation of the State Secretariat for Labor and Social Security.

• 8)

  EMPLOYER(S): Any natural or legal person, private or public law entity that uses the services of one or more worker(s) by virtue of an employment or service contract. For purposes of this Law, the terms "patron" or "entrepreneur" should be understood as employer, as used in current legislation, in matters of Social Security, Commercial and Labor law.

• 9)

  ELIGIBLE FOREIGN NATIONAL(S): Any foreign national, male or female, residing in the country, who meets the legal requirements to be affiliated to the Social Protection System.

• 10)

  ADMINISTRATIVE EXPENSES: Those incurred in concept of salaries and wages, maintenance and public services, professional fees, financial expenses, reserves for uncollectible accounts and any other applicable expense in accordance with international accounting standards applicable and in force in Honduras, different from operating expenses.

• 11)

  OPERATING EXPENSES: Those incurred by Institutions in concept of obligations defined in its Law and that derive from the provision of benefits and services.

• 12)

  GRADUALISM: Successive, consistent and continuous stages for implementing in a phased manner provisions relating to caps, percentages of utilization and contributions or any other parameters contained in the present Law, based on the size of businesses and the financial capacity of the participating entities, with the purpose of ensuring financial sustainability and social well-being of citizens, for purposes of this Law gradualism is established through the assignment of specific time periods, including strategies for progressive strengthening of the public health network.

• 13)

  PENSION INSTITUTES: Autonomous entities with legal personality and independent separate patrimony, responsible for the administrative management of a Public Pension Fund.

• 14)

  SOCIAL PUBLIC POLICIES: Set of actions carried out by the State, with the purpose of providing the entire population, particularly the most vulnerable, real options for Development and Social Protection, through the design, financing, implementation, monitoring and evaluation of strategies and programs, implemented in a systematic, coherent and coordinated manner, by different public, private and mixed institutions.

• 15)

  SOCIAL PROTECTION: Result of the adoption and implementation of goods and practices of universal social security coverage, aimed at covering the main risks to which persons are exposed in the different stages of their life course.

• 16)

  NETWORK OF HEALTH SERVICE PROVIDING UNITS: Group of Health Service Providing Units, which are grouped through a health services administration network, in a complementary form and under the principle of efficiency and continuity, to guarantee the provision of health benefits and services covered by Health Care Insurance, in the context of the Guaranteed Set of Health Benefits and Services defined by the State Secretariat for Health, within the terms provided in this Law.

• 17)

  INTEGRATED PUBLIC HEALTH NETWORK: The Health Services Network comprised of service providing units of the Honduran Institute of Social Security (IHSS), entities of the State Secretariat for Health and others that join such network, within the framework of the registration of agreements, contracts and agreements, in accordance with the Law.

• 18)

  OCCUPATIONAL RISKS: Accidents or diseases to which workers(s) are exposed on the occasion of or by cause of the work they perform.

• 19)

  SOCIAL SECURITY: The objective of the State of Honduras, in service of social justice, which has as its purpose to guarantee through social promotion, the prevention and management of the risks inherent to human life, ensuring medical care, protection of means of subsistence and other necessary social rights for the achievement of individual and collective well-being.

• 20)

  SOCIAL PROTECTION SYSTEM: Set of Institutions, plans and programs that constitute the Public Policies of the State, intended to cover the main risks and basic needs associated with the life course, guaranteeing the socioeconomic security of all inhabitants.

• 21)

  CONTRIBUTION CAP: Refers to the maximum value defined as a limit on which individual contributions and employer contributions would be made, as applicable to each regime and pillars that constitute the System.

• 22)

  HEALTH SERVICE PROVIDING UNITS: Official, mixed, private, community or solidarity-based entities, that are authorized by the State Secretariat for Health and certified by the Honduran Institute of Social Security (IHSS), for the provision of health services contemplated in the present Law, organized and articulated through Health Service Administrator entities. This definition includes hospital institutions of the Integrated Public Health Network, and,

• 23)

  VULNERABILITY: Duly qualified situation in which persons are found exposed to the main socioeconomic risks associated with the life course, such as death, disability, old age, unemployment, diseases, accidents, among others; and that generate orphanhood, widowhood, incapacity, senescence and other factors of physical or mental disability and other similar factors generating poverty.

RIGHT TO SOCIAL SECURITY.- The Executive Branch through the State Secretariats guarantees to all the population, without waiver, the inalienable right to social security. The benefits and services deriving from said right must be provided and administered by the Honduran Institute of Social Security (IHSS) in accordance with what is established in the Constitution of the Republic and the present Law, through a gradual and progressive implementation of coverage to all sectors. The Executive Branch through the State Secretariats must establish the regime of incentives, terms, controls and sanctions to achieve universality.

FUNDAMENTAL PRINCIPLES OF THE SYSTEM.- In order to achieve the objectives set out within the framework of best practices and conventions that govern the matter at the international level, State institutions and civil society within their competencies must ensure that, in the implementation of the Social Protection System of Honduras, the following fundamental principles are complied with:

• 1)

  SHARED RESPONSIBILITY: Commitment of workers, employers and the State, in raising awareness to face with rigorous discipline their specific function and role of ensuring the perpetuity of the system and the benefits it provides. For such purpose, in addition to ensuring compliance with the rights of workers, they must demand from these the fulfillment of their corresponding obligations.

• 2)

  EFFICIENCY: Guarantees proper utilization of the resources available to the System so that the benefits ensured by this Law are provided efficiently with quality and warmth;

• 3)

  EQUITY: Creates conditions of access to opportunities according to basic needs by life course, guaranteeing the participation and representation of vulnerable groups in sustainable social development processes;

• 4)

  EQUALITY: Guarantees that every person is equally protected against the same contingency. Analyzing social and economic inequalities, treatment must be appropriate so that the benefit covers the risk in question in a dignified manner, regardless of such inequality;

• 5)

  INTEGRITY: The commitment of institutions, sectors and persons, among themselves and with all actors related to social development and protection, to address with individual and collective ethics the standards and principles of human coexistence and social justice;

• 6)

  PREVENTION: Recognizes the need to anticipate and appropriately manage the risks to which we are exposed in the life cycle in order to prevent or mitigate their effects, including as a priority education in principles and values, preventive medicine, sport and recreation as fundamental elements for the development and social security of the population;

• 7)

  RESPECT FOR THE HUMAN PERSON: Recognizes that the human person is the center and reason for being of public policies on Development and Social Protection, therefore, his Social Security is the main objective to be achieved;

• 8)

  SOLIDARITY: Fraternal value by which each individual contributes according to their capacities, to contribute to the most vulnerable population and also receive benefits according to their needs, in order to achieve harmonious coexistence and social security for all. It implies the redistribution of wealth, socioeconomic support from the healthy to the sick, from the young to the elderly, from the rich to the poor and from regions with more resources to those living in poorer regions;

• 9)

  SUBSIDIARITY: Which implies alternatively that the State does not take upon itself the contribution that persons and collective entities can make in good conditions and, conversely, the obligation of the State to provide for the satisfaction of collective needs, to the extent that individuals are unable to achieve it.

• 10)

  SUFFICIENCY AND SUSTAINABILITY: By which workers, employers and State, assume the shared responsibility of the constitutional obligation to contribute to the financing, improvement and expansion of the Social Protection System, so that it is solvent and guarantees the provision of dignified and comprehensive benefit and service provisions, in perpetuity. The State is the guarantor of compliance with Acquired Rights deriving from the Social Protection System,

• 11)

  TRANSPARENCY: Comply with the obligation to offer the population, render accounts and allow access to public information;

• 12)

  TRIPARTISM: Decision-making, with the contribution of representatives of workers, employers and the State, providing shared, responsible leadership and teamwork, that promotes integral development and well-being; and,

• 13)

  UNIVERSALITY: All Hondurans and residents must have the right of the Social Protection System, in accordance with the progressivity and gradualism provided for in the present Law. CHAPTER II OF THE STRUCTURE OF THE SYSTEM

MULTIPILLAR MODEL.- The Social Protection System provides coverage against contingencies arising from the main risks associated with the life course of persons, through a multipillar structure model that proposes through plans and programs generating benefits and services that guarantee protection. The System is comprised of the following regimes:

• 1)

  Social Protection Floor Regime;

• 2)

  Social Insurance Regime;

• 3)

  Health Care Insurance Regime;

• 4)

  Occupational Risk Insurance Regime; and,

• 5)

  Labor Coverage Insurance Regime. CHAPTER III OF THE SCOPE OF APPLICATION OF THE SYSTEM

PROTECTED AND OBLIGATED PERSONS.- Subjects of coverage within the Social Protection System are Hondurans and eligible foreign nationals, who meet the conditions established in applicable regulations to access benefits and services, who have access to coverage of their needs, in the different stages of the life course. Obligated to contribute to all the Regimes established in the preceding Article, except for the Social Protection Floor Regime, with their employer contributions and individual contributions, as applicable to eligibility, in accordance with the Law of Social Insurance, its Regulations and other applicable norms: Employers and their workers who earn a salary or money or in kind of both genders and who provide their services to a natural or legal person, regardless of the type of labor or service relationship that binds them and the form of remuneration, as well as the legal person regardless of the economic nature of the employer, company or public, private or mixed institution that uses their services. To the employer and worker contributions is added that made by the State as employer, as well as solidarity contributions made by it to the Social Protection System, in its capacity as State, to subsidize groups of workers in situations of socioeconomic vulnerability. Workers who perform remunerative work on their own account and who do not require financial assistance from the State, are obligated to contribute to the social security system under the conditions established in the Law of Social Insurance and the regulations approved for such purpose. Workers are obligated to provide employers and the Honduran Institute of Social Security (IHSS), with the necessary data for the fulfillment of obligations arising from the present Law. Social Insurance Law and other applicable legal norms. TITLE II OF THE SOCIAL PROTECTION FLOOR REGIME

DEFINITION AND PURPOSE OF THE SOCIAL PROTECTION FLOOR (SPF).- The Social Protection Floor (SPF), is the non-contributory pillar that guarantees access to essential services and social transfers with emphasis on the poorest and most vulnerable persons. Its approach incorporates universal extension of social protection, but giving budgetary preference to the care of the population in situations of poverty and high vulnerability. The Social Protection Floor (SPF) constitutes the platform for the plan for solidary and inclusive social development and is the starting point for building universalization, inclusion and compliance with the rights to social development of the population; being also a measure to gradually build the achievement of broader contributory forms of social protection, that is, as a measure of social protection within its structure framework that gives rise to the successive social protection regimes contemplated in this Law. The Social Protection Floor (SPF) contemplates two (2) major components: 1) A basic set of essential social rights and monetary and/or in-kind transfers, as a progressive platform for solidary and inclusive social development, in order to guarantee access to benefits and essential services and security of minimum income and opportunities; and, 2) The supply of an essential level of essential goods and services, such as health and sanitation, education, food, social housing, recreation, complete food care and others according to national priority needs.

BENEFITS, PLANS AND PROGRAMS OF THE SOCIAL PROTECTION FLOOR (SPF).- With the purpose of achieving inclusive, equitable socioeconomic development with gradual and progressive vocation of universality, the Social Protection Floor (SPF) must progressively obtain through public, private or mixed institutions, at least the following benefits:

• 1)

  Basic income per child, as well as access to other goods and services, that guarantee the adequate integral development of the child, including but not limited to the following programs:

  • a)

    Conditional Cash Transfers in Money or Kind;

  • b)

    Comprehensive Child Development Programs, with Emphasis on Early Childhood;

  • c)

    Basic School Supplies;

  • d)

    School Nutrition;

  • e)

    Scholarship and Solidarity Assistance Programs; and, f) Other Educational Benefits, Protection and Child Care that may be established in accordance with the Law.

• 2)

  Plans and Programs that promote Integral Health;

• 3)

  Plans and programs that promote employment, food and nutritional security of families,

• 4)

  Recreational plans that promote prevention, culture and sport, for healthy recreation for the integral development of families and communities;

• 5)

  Care plans and temporary homes, for children in situations of abandonment or vulnerability of rights and other population groups with high degrees of socioeconomic vulnerability.

• 6)

  Care plans and subsidies in money or kind, that promote financial inclusion for rental, purchase, construction and improvement of housing, as well as, for covering the financing of other basic needs that allow improving the patrimony and socioeconomic condition of families;

• 7)

  Care plans for elderly adults, persons in situations of widowhood, orphans under the age of majority and disabled persons with total and permanent incapacity, duly proven in their cases and who live in extreme poverty.

• 8)

  In-kind care plans that assist in providing dignified burial for low-income persons;

• 9)

  Creation of a National Scholarship Fund for students with disabilities; and,

• 10)

  Other essential programs and plans for the adequate promotion and social protection of the community, contemplated in Article 45 of Legislative Decree No. 278-2013 dated December 21, 2013. The minimum requirements, coverage and other aspects that quantify and qualify the provision of benefits and services provided by the Social Protection Floor, must be defined within the framework of laws, regulations and other special norms that are issued for such purpose, and must observe the principles of targeting, prioritization and transparency.

ARTICULATION AND COORDINATION OF THE SOCIAL PROTECTION FLOOR (SPF).- In order to ensure adequate compliance with the basic guarantees for the development and social protection of the population, the National Council for Coordination and Articulation of Social Policies (CONCAPS), chaired by the President of the Republic, must formulate public policies for social protection and the corresponding strategic execution plan and promote plans for technical monitoring and follow-up for quantifiable evaluation, so that the different programs and plans of benefits and services provided by the State Secretariats and other responsible institutions in the Office of Development and Social Inclusion, are articulated, regulated and coordinated with each other.

SOLIDARITY AND SOCIAL PROTECTION FUND FOR POVERTY REDUCTION.- For financing the Social Protection Floor Regime (SPF), the State Secretariat for Finance, must consider in the General Budget Project of Income and Expenses of the Republic to be sent to the National Congress, the budget allocations to proceed with the financial strengthening of the Solidarity and Social Protection Fund for Poverty Reduction, which must be constituted and overseen in accordance with what is established:

• 1)

  The value resulting from the solidarity contribution of the State as such, to which Title V of "Law on Organization of Public Finances, Control of Tax Exemptions" contained in Decree No. 278-2013 dated December 21, 2013 refers;

• 2)

  The solidarity contribution of the State, according to the value equivalent resulting from applying twenty percent (20%) of the profitability of new concessions granted by the State of Honduras to third parties, as of the effective date of the present Law, regardless of their nature or origin;

• 3)

  The value resulting from applying fifteen percent (15%) of the real profitability generated on non-financial investments conceded by the State to the Pension Institutes, in excess of the four point five percent (4.5%) technical interest required of such institutes by the National Commission of Banks and Insurance (CNBS);

• 4)

  The additional contributions allocated in the General Budget of Income and Expenses of the Republic for the strengthening of the Social Protection Floor (SPF), which must be allocated according to the financial capacity of the State; and,

• 5)

  Other sources of financing such as: Loans, contributions and subsidies from institutions; donations, inheritances and legacies, as well as national and international cooperation of licit origin, from natural or legal persons, public or private, or that account for through special report in accordance with the standards and procedures regulated by the Superior Court of Accounts (TSC) or the competent body that must provide the cooperation, and others obtained legally for any title. The amounts contributed by the State to the Solidarity and Social Protection Fund for Poverty Reduction, must be reviewed and adjusted annually by the National Council for Coordination and Articulation of Social Policies (CONCAPS), so that they are associated with economic growth and maintain adequate balance between the population served and the fiscal capacity of the State. These amounts must be deposited in the Central Bank of Honduras (BCH) or in one or more Banks of the National Financial System, through a Trust, in order to ensure that the economic resources collected are invested under the best administrative conditions and profitability, security and liquidity. Municipal corporations that wish to benefit from the programs and benefits of the Social Protection Floor (SPF) must establish coordination agreements with the State Secretariat for Development and Social Inclusion, in which case authorization must be granted to the State Secretariat for Finance to deduct from the cost of benefits provided and from the budget items of municipal transfers, in the General Budget of Income and Expenses of the Republic.

BUDGET ORDER.- Each Secretariat or Institution of the State, in accordance with Law that is responsible for the implementation and execution of the plans and programs that make up the Social Protection Floor Regime (SPF) noted in Article 8 of the present Law, must ensure the allocation of resources within the General Budget of Income and Expenses of the Republic, according to what is planned and approved within the National Council for Coordination and Articulation of Social Policies (CONCAPS). TITLE III OF THE SOCIAL INSURANCE REGIME

PURPOSE AND BENEFITS.- The Social Insurance Regime, has as its purpose to guarantee the economic means of subsistence, in the event of disability, old age or death. For the fulfillment of its objective, the Social Insurance Regime must provide its benefits within the scope of the following pillars: 1) COLLECTIVE CAPITALIZATION PILLAR: It is a contributory plan, whose objective is to provide insurance coverage for the effort of contribution, against contingencies arising from Disability, Old Age and Death (IVM), for all its affiliates and their dependents, based on the actuarial and solidarity distribution of risks, as established in the Law of Social Insurance and other applicable legal norms, the Honduran Institute of Social Security (IHSS) being the entity that provides and administers the benefits of such pillar; and, 2) COMPLEMENTARY PILLAR OF INDIVIDUAL ACCOUNTS: It is constituted by the set of benefits and services that in pension matters, must be contracted by employers and/or workers, through Individual Capitalization in Complementary Capitalization Accounts to the other pillars and voluntarily to the extent that exceeds the percentage provided for by Law, as well as those coverages administered by specialized institutions by delegation of the different insurance regimes, in order to guarantee the objectives of the present Law.

FINANCING OF THE SOCIAL INSURANCE REGIME.- Each of the pillars constituting the Social Insurance Regime, must be financed in accordance with the following criteria: 1) COLLECTIVE CAPITALIZATION PILLAR: For the financing of the pension coverages of this pillar, are obligated to contribute. The State, Employers and Workers, within the framework of what the Law of Social Insurance provides, its Regulations and other applicable norms. Without prejudice to obligations arising from what is established in Title VI "Of the Labor Coverage Insurance Regime" of the present Law, the employer contributions and mandatory worker contributions, destined to pensions within the framework of this Pillar, must be made by applying the contribution and contribution percentages established by the Law of Social Insurance on the Salary Subject to Contribution that exceeds the Contribution Cap established in Article 43 of the present Law. 2) COMPLEMENTARY PILLAR OF INDIVIDUAL PENSION ACCOUNTS.- Workers and employers, must make their contributions to Individual Capitalization Accounts for pension purposes, within the framework of what the Law of Social Insurance provides, Law of Administrators of Pension and Unemployment Insurance Funds, its Regulations and other applicable norms. Without prejudice to obligations arising from what is established in Title VI "Of the Labor Coverage Insurance Regime", of the present Law, the employer contributions and mandatory worker contributions, destined to pensions within the framework of this Pillar, must be made by applying the contribution and contribution percentages established by the Law of Social Insurance on the Salary Subject to Contribution that exceeds the Contribution Cap established in Article 43 of the present Law. The total rate of employer and individual contribution, must be determined in the Law of Social Insurance, taking as a basis, for the first time, the Employer and Individual Contribution of zero percent (3%) of the Law of the Private Contribution Regime (RAP) contained in Decree 107-2013, the three percent (3%) contributed to the Disability, Old Age and Death Regime (IVM), established in the Law of Social Insurance, contained in Legislative Decree No. 140 of May 19, 1959 and its amendments. Plus the solidarity contribution of the State of zero point five percent (0.5%), as provided in Article 45 of the present Law. Said contribution must be made, taking as a basis the contribution cap established in the Law of Social Insurance, which for the first time must be equal to a minimum wage at its highest level. Said cap must be updated annually taking as a basis the growth of the Gross Domestic Product and the behavior of the Consumer Price Index, as a measure of inflation, both indices determined by the Central Bank of Honduras. In the case of companies with fewer than ten (10) workers, whose employers contribute to the Private Contribution Regime (RAP), the implementation of said obligation with respect to the Collective Capitalization Pillar to contribute one point five percent (1.5%) of employer contributions and to contribute one point five percent (1.5%) individual contributions, is of gradual application, as of January 2018 in the terms agreed upon by the Economic and Social Council (CES). The reserves constituted by the Collective Capitalization Pillar, product of state contributions, employer contributions, individual contributions, voluntary contributions, donations and inheritances, bequests and donations and economic resources of the Honduran Institute of Social Security (IHSS), are values exclusively destined to the provision of benefits, services and other applicable operating expenses within the framework of what is established in the present Law, the Law of Social Insurance and its Regulations.

MANAGEMENT AND INSURANCE OF THE SOCIAL INSURANCE REGIME.- The insurance and management of the benefits of the Social Insurance Regime deriving from the Collective Capitalization Pillar and other public insurance regimes that require the constitution of technical and mathematical reserves, shall be the responsibility of the Honduran Institute of Social Security (IHSS), by constitutional mandate, in accordance with the scope determined by the Law of Social Insurance, its Regulations and other applicable norms. The management of the individual accounts that are necessary for the correct and transparent management of the Complementary Individual Capitalization Pillar must be handled by institutions authorized as Administrators of Pension and Unemployment Insurance Funds, whether public, private or mixed, with or without profit motive, specialized in the administration of pension and unemployment funds, whether a financial system institution constituted for this purpose or any other figure authorized by the National Commission of Banks and Insurance (CNBS), within the framework of the conditions established by the special law that regulates such institutions. The National Institute of Pensions and Insurance of Employees and Officials of the Executive Branch (INUPEMP), the National Institute of Provision of the Teaching Profession (INPREMA) and the Military Pension Institute (IPM), must continue managing the contributory benefits of their affiliates provided in the organic laws of such pension institutes. The State is the guarantor of compliance with acquired rights deriving from the different laws of the Institutes of Social Provision. TITLE IV OF THE HEALTH CARE INSURANCE REGIME CHAPTER I OF THE PURPOSE AND SCOPE OF APPLICATION

PURPOSE AND SCOPE OF APPLICATION.- The Health Care Insurance Regime, has as its purpose that all persons who form part of the population, have equitable access to comprehensive benefits and services they need throughout their life course, within the framework of the exercise of the fundamental right to health, with quality and without financial hardship. The Regime is materialized with access to a Guaranteed Set of Health Benefits and Services, for the population, providing measures of promotion, prevention, cure, rehabilitation and support in health, defined by the State Secretariat for Health and other directives for control and regulation of integrated health services, that for such purposes is established in this sector. OF THE NATIONAL HEALTH SYSTEM, GOVERNANCE AND SUPERVISION

NATIONAL HEALTH SYSTEM.- The National Health System comprises the functions of governance, financing, insurance, and provision of health services. It is constituted by all organizations and institutions, including resources and services, whose principal objective consists of caring for, attending to, and comprehensively improving the health of the population, giving preference to prevention and primary health care. To guarantee the sufficiency of health benefits and services to the population, through the National Health System, it must have at least the following components:

• 1)

  Guaranteed Set of Health Benefits and Services, including a national list of essential medicines, with sufficiency and accessibility for the entire population;

• 2)

  Adequate professional health personnel in quantity, quality, and relevance;

• 3)

  Existence of a national program for training, capacity building, and updating of personnel;

• 4)

  Strengthening of community and municipal health programs;

• 5)

  Implementation of a risk compensation mechanism that fosters adequate distribution of payments based on assumed risk, in order to avoid adverse selection in the different networks that make up the Health Care Insurance;

• 6)

  Implementation of an integrated information, monitoring, and evaluation system, based on a baseline with indicators based on the social determinants of health, aimed at financing and continuous improvement of the System; which must be administered by the Honduran Social Security Institute (IHSS). The information handled for such purposes is the property of said institution.

GOVERNANCE OF THE NATIONAL HEALTH SYSTEM.- It is the responsibility of the Executive Branch through the Ministry of Health, by delegation of the Presidency of the Republic, to govern the National Health System, in accordance with the competencies, functions, and powers defined through the Law of the National Health System, within the framework of this Law.

INSURING ENTITY OF THE NATIONAL HEALTH SYSTEM.- The benefits and services derived from the Health Care Insurance System must be insured, provided, and administered by the Honduran Social Security Institute (IHSS). The State is obligated to strengthen the essential functions of public health, including the role of governance and supervision, as well as the professionalization, research, and modernization of the system. The Honduran Social Security Institute (IHSS), in its capacity as system insurer, must administer separately, from its collection, both financially and operatively, the Contributory Pillar Fund and the Fund constituted by the values from persons in its affiliation, through the gradual and progressive implementation of the Guaranteed Set of Health Services, a national list of essential medicines, and other control and regulation directives of the integrated health services that are established for such purposes by this sector.

MODERNIZATION AND STRENGTHENING OF THE PUBLIC HEALTH NETWORK.- In order to provide services with an adequate level of quantity, quality, timeliness, and efficiency, the State must continuously pursue the administrative, technical, and financial modernization of the Integral Public Health Network, in such a way as to promote real articulation between the different levels of Health Care from primary health care to more complex services, so that there is continuity according to the nature of the service, which involves referral and counter-referral systems in which the private sector acts in a complementary manner to the public sector and not as a substitute, in accordance with the provisions established in this Law. The Public Pension Institutes of the country may invest part of their assets in the strengthening of the Integral Public Health Network associated with the care of their affiliates, provided that the return on the investment portfolio, adjusted for risks, is consistent with the current return required by the institutes to meet their pension obligations. The minimum portion of assets that Public Pension Institutes can invest in such projects, as well as policies, guidelines, and other specific conditions governing such investments, must be approved by the National Commission of Banks and Insurance (CNBS) through the Special Regulations issued for such purposes. CHAPTER III OF THE STRUCTURE AND BENEFITS OF THE HEALTH CARE INSURANCE SYSTEM

STRUCTURE AND COVERAGE.- The Ministry of Health must define the Guaranteed Set of Health Benefits and Services, in accordance with technical, financial, and actuarial criteria, based on the priorities and operational sufficiency of the System; which ensures that each benefit offered or service received through the participation of service providers, offering the participation of service providers, offering the guarantees of continuity of care for which users of care dependent on the budget and services at its normal level, and ensuring benefits and services that provide coverage for health risks based on the benefits and services contemplated in this Law, in the Social Security Law and its Regulations, and any other applicable norms. Additionally, the Health Care Insurance must implement universal coverage for traffic accidents, in accordance with the special law issued for such purposes.

ARTICULATION OF THE SYSTEM.- In the National Health System, the benefits and services of the contributory and subsidy pillars listed above coexist in an articulated manner; for such purposes, agreements must be made regarding the continuity and provision of services jointly, in order to gradually and progressively create a unified and universal public health insurance system. CHAPTER IV OF OTHER ACTORS OF THE NATIONAL HEALTH SYSTEM

HEALTH SERVICE ADMINISTRATORS AND NETWORKS OF HEALTH SERVICE UNITS.- The Honduran Social Security Institute (IHSS), through the Integral Public Health Network, must guarantee the benefits established within the scope of its economic, technical, human, and material capacity. For the purpose of providing adequate administration, provision, monitoring, surveillance, and control of services and the best quality standards of the System, the Honduran Social Security Institute (IHSS) is authorized to execute contracts, agreements, or arrangements with Health Service Administrators and/or Health Service Provider Units, whether public, private, or mixed, with or without profit motive, whenever necessary, feasible, and convenient for the fulfillment of the objectives of the National Health System and consistent with its governing principles. Health Service Administrators hired by the Honduran Social Security Institute (IHSS) must guarantee, through their Network of Health Service Provider Units, the capacity to fully meet the benefits and services required by the Health Care Insurance, in accordance with the levels of care demanded by the Honduran Social Security Institute (IHSS), individually supported with one year of transparency, objectivity, and quality. For such purposes, Health Service Administrators may subcontract Health Service Units, provided they are duly authorized by the Ministry of Health and certified by the Honduran Social Security Institute (IHSS), through contracts between said Institute and Health Service Administrators that include payment models for training and packages of profitable pathologies, among others, as well as copayments inversely proportional to income, fees for service providers, and other regulatory and control measures. The Honduran Social Security Institute (IHSS) is prohibited from paying Health Service Administrators based on fixed advance premium schemes that promote unlimited profit of third parties and the detriment of health service quality, as well as any other scheme that does not promote results-based management, based on mandatory competence regarding the social determinants of health and other objectives and principles of the System. To guarantee timely payment to Health Service Administrators, a special trust fund must be established by the Honduran Social Security Institute (IHSS) and the Ministry of Health, administered by the Central Bank of Honduras (BCH) or another National Financial System Bank approved for such purposes. The referred contract must be approved by the Social Security Council (CSS), following a favorable opinion from the National Commission of Banks and Insurance (CNBS). The Social Security Council (CSS) must ensure that the resources of the different sub-trusts are collected, administered, and invested in accordance with law. For such purposes, it must be ensured that an annual external audit is hired at the expense of the respective fund by an audit firm authorized by the National Commission of Banks and Insurance (CNBS), so that a report and corresponding opinions are issued on the handling and destination of each of the funds.

RIGHT TO CHOOSE.- Based on regional needs and for the purpose of encouraging competitiveness and thereby the quality of benefits granted by the Contributory Pillar of the Health Care Insurance, the Honduran Social Security Institute (IHSS) may certify more than one Health Service Administrator and/or Health Service Provider Unit, so that in its judgment more options are required in relation to its criterion of best offer, among different Health Service Administrators and/or Health Service Provider Units, considering the benefits offered and the professionals assigned or with labor ties to it. For the payment of such services, affiliation by such professional will determine whether the Health Care Service Administrator may be individual or collective through companies, professional associations, or geographic agreements, in accordance with the Social Security Law and its Regulations. Nevertheless, the collective character of affiliation is voluntary, for which reason the insured contributing worker shall not lose the right to freely choose another Network of Service Providers, within the framework of what the Law provides. TITLE V OF THE PROFESSIONAL RISK INSURANCE SYSTEM

OBJECT.- The Professional Risk Insurance System has the purpose of specially protecting the worker against the occurrence of Work Accidents and Professional Diseases and the protection of damage that he or she and their family members will suffer, in accordance with the provisions of the Social Security Law, the Labor Code, its Regulations, and other applicable norms.

MANDATORY INSURANCE.- Persons subject to mandatory coverage of Professional Risk Insurance are those linked to another, whether natural or legal person, regardless of the type of labor or service relationship that links them, as well as the legal personality or economic nature of the employer, company, or public or private institution that uses their services. Also subject to coverage of this insurance are self-employed workers or those in special employment conditions who, within the framework of the Social Security Law, must be affiliated with Professional Risk Insurance, as well as those who voluntarily affiliate and/or those who contribute through the PRO-SOLIDAR Plan. It is mandatory for all employers to contract insurance for work accidents and professional diseases, which must be contracted by them with the Honduran Social Security Institute (IHSS). TITLE VI OF THE LABOR COVERAGE INSURANCE SYSTEM CHAPTER I OF THE OBJECT, SCOPE, FINANCING, AND BENEFITS

OBJECT AND SCOPE.- The Labor Coverage Insurance System has as its purpose the effective and mandatory payment of severance benefits derived from the Labor Code, the creation of compensation for years of service and other services that may be generated to the worker, derived from the effective constitution of a labor reserve established in their name.

FINANCING AND BENEFITS.- To fulfill its purpose, the Labor Coverage Insurance System contemplates the Individual Capitalization Labor Reserve, constituted through mandatory employer contributions of at least four percent (4%) monthly of Ordinary Salary, based on a contribution ceiling established at a higher level; and subsequently the contribution ceiling must be updated annually, based on the growth of the gross domestic product and the behavior of the consumer price index as a measure of inflation, both determined by the competent authority and must be annualized based on internal valuation in the Consumer Price Index (CPI) published by the competent authority. Due under license of the contributors in the name of the worker in the corresponding individual account, within the Labor Reserve Sub-account, managed by entities authorized by the National Commission of Banks and Insurance (CNBS) as Pension and Severance Fund Administrators, freely chosen by each worker. In the case of companies with fewer than ten (10) workers, they are exempt from this obligation until January 2018, their incorporation must be done from that date in accordance with the gradualism parameters defined by the Economic and Social Council (CES). All salaried workers must have a Labor Reserve Individual Capitalization Sub-account, which cannot be substituted or modified in terms other than those established in this Article, by any provision or agreement made between private parties. Employers who, upon the entry into force of this Law, had already agreed, through individual or collective agreements or by special laws, the annual payment of severance benefits, are obligated to constitute the Individual Capitalization Reserve by deducting the same from the accumulated payment or, failing that, in accordance with what is agreed between the parties. In cases where the worker becomes unemployed and has debt obligations for housing installments derived from social credit programs or other social credit programs, part of the resources must be used to amortize said credit in accordance with special regulations for the purpose of protecting the worker and their family. Employers of Micro-enterprises defined in Article 120 of the Labor Code must contribute to the Labor Reserve Individual Capitalization Sub-accounts of each of their workers the percentage determined by the Economic and Social Council (CES). The amount constituted by the employer as years of service compensation must be received by the worker upon termination of the labor relationship for any of the causes stated in the Labor Code in which such compensation is payable, as provided in this Law. The individual labor capitalization reserve provided for in this Article, as well as the use and disposition of resources in accordance with what is established in Articles 120 as reformed, 120-A, and 120-B of the Labor Code, including rights previously acquired by workers, must be resolved in the terms provided by these provisions, prior to their reforms. The provisions contemplated in this Chapter are not applicable to workers regulated by the Civil Service Law, as well as to employers and public officials of decentralized bodies and other public entities subject to special hiring modalities and norms.

FINANCING AND BENEFITS.- To fulfill its purpose, the Labor Coverage Insurance System contemplates the Individual Capitalization Labor Reserve, constituted through mandatory employer contributions of at least four percent (4%) monthly of Ordinary Salary, based on a contribution ceiling established at a higher level; and subsequently the contribution ceiling must be updated annually, based on the growth of the gross domestic product and the behavior of the consumer price index as a measure of inflation, both determined by the competent authority and must be annualized based on internal valuation in the Consumer Price Index (CPI) published by the competent authority. Due under license of the contributors in the name of the worker in the corresponding individual account, within the Labor Reserve Sub-account, managed by entities authorized by the National Commission of Banks and Insurance (CNBS) as Pension and Severance Fund Administrators, freely chosen by each worker. In the case of companies with fewer than ten (10) workers, they are exempt from this obligation until January 2018, their incorporation must be done from that date in accordance with the gradualism parameters defined by the Economic and Social Council (CES). All salaried workers must have a Labor Reserve Individual Capitalization Sub-account, which cannot be substituted or modified in terms other than those established in this Article, by any provision or agreement made between private parties. Employers who, upon the entry into force of this Law, had already agreed, through individual or collective agreements or by special laws, the annual payment of severance benefits, are obligated to constitute the Individual Capitalization Reserve by deducting the same from the accumulated payment or, failing that, in accordance with what is agreed between the parties. In cases where the worker becomes unemployed and has debt obligations for housing installments derived from social credit programs or other social credit programs, part of the resources must be used to amortize said credit in accordance with special regulations for the purpose of protecting the worker and their family. Employers of Micro-enterprises defined in Article 120 of the Labor Code must contribute to the Labor Reserve Individual Capitalization Sub-accounts of each of their workers the percentage determined by the Economic and Social Council (CES). The amount constituted by the employer as years of service compensation must be received by the worker upon termination of the labor relationship for any of the causes stated in the Labor Code in which such compensation is payable, as provided in this Law. The individual labor capitalization reserve provided for in this Article, as well as the use and disposition of resources in accordance with what is established in Articles 120 as reformed, 120-A, and 120-B of the Labor Code, including rights previously acquired by workers, must be resolved in the terms provided by these provisions, prior to their reforms. The provisions contemplated in this Chapter are not applicable to workers regulated by the Civil Service Law, as well as to employers and public officials of decentralized bodies and other public entities subject to special hiring modalities and norms.

FINANCING OF THE HEALTH CARE INSURANCE SYSTEM.- Workers, employers, and the State are obligated to contribute to the financing of the different pillars that constitute the Health Care Insurance System, to achieve its improvement and expansion. The rate of employer and individual contribution to the contributory system of Health Care Insurance must be determined in the Social Security Law, taking as a basis, for the first time, an overall contribution of five percent (5%) and an individual contribution of two point five percent (2.5%), established in the Social Security Law in Legislative Decree number 140-1959 and its reforms. Plus the State's solidarity contribution of zero point five percent (0.5%), as provided in Article 45 of this Law. Said contribution must be made, based on the contribution ceiling established in the Social Security Law and which, for the first time, must be equal to the minimum salary at its highest level. Said ceiling must be updated annually based on the growth of Gross Domestic Product and the behavior of the Consumer Price Index as a measure of inflation, both indices determined by the Central Bank of Honduras. For self-employed workers and others in special labor conditions who present socioeconomic insufficiency and who, due to such circumstances, are affiliated through the Subsidized Pillar through the PRO-SOLIDAR PLAN, must make their individual contributions in accordance with their capacities, in the manner established in the Social Security Law and its Regulations. Self-employed workers who do not require the economic assistance of the State must contribute to the Social Security System, under the conditions established in the Social Security Law and the regulations approved for such purpose. The Honduran Social Security Institute (IHSS), considering the obligation generated by the implementation of the Subsidized Pillar, must incorporate into its operational planning, with respect to Health Care Insurance coverage, the subsidized affiliates who are covered through the Plan for the Promotion of Solidarity and Reciprocal Aid (PRO-SOLIDAR Plan) established in Article 43 of this Law.

PREVENTION.- The Social Security Law, the Labor Code, and its regulations must establish the norms for prevention of professional risks and the reparation of damage derived from and in the occasion of work.

REGULATION OF THE OCCUPATIONAL RISK INSURANCE REGIME.- The Regulation of the Occupational Risk Insurance Regime, issued by the Honduran Social Security Institute (IHSS), must establish the list of compensable occupational diseases, together with the occupations in which these may be contracted. Said list, which is not limiting, must contain at least the diseases enumerated in the conventions ratified with the International Labour Organization (ILO).

OBJECT AND SCOPE.- The Labor Coverage Insurance Regime has as its purpose the effective and mandatory payment of unemployment benefits derived from the Labor Code, the creation of compensation for length of service and other services that may be generated for the worker, derived from the effective constitution of a labor reserve established in their name.

FINANCING AND BENEFITS.- To fulfill its purpose, the Labor Coverage Insurance Regime contemplates the Individual Capitalization Labor Reserve, constituted through mandatory employer contributions of at least four percent (4%) monthly of ordinary salary, based on a contribution ceiling established at a higher level; and subsequently the contribution ceiling must be updated annually, taking as a basis the growth of gross domestic product and the behavior of the consumer price index as a measure of inflation, both determined by the competent authority and must be adjusted annually based on the valuation in the Consumer Price Index (CPI) published by the competent authority. Due under license of the contributors in the name of the worker in the corresponding individual account, within the Labor Reserve Sub-account, managed by entities authorized by the National Banking and Insurance Commission (CNBS) as Pension and Severance Fund Administrators, freely chosen by each worker. In the case of companies with fewer than ten (10) workers, it is exempt from this obligation until January 2018, its incorporation must be done as of that date in accordance with the gradualism parameters defined by the Economic and Social Council (CES). All salaried workers must have a Labor Reserve Sub-account of Individual Capitalization, which cannot be substituted or modified in terms other than those established by this Article, by any provision or convention agreed upon between individuals. Employers who, upon the entry into force of this Law, have already agreed, through individual or collective agreements or by special laws, the annual payment of unemployment assistance, are obliged to constitute the Individual Capitalization Reserve by deducting the same from the accumulated payment or otherwise in accordance with what is agreed between the parties. In cases where the worker becomes unemployed and has debt obligations from housing quotas derived from social credit programs or other social credit programs, part of the resources must be used to amortize said credit in accordance with special regulations in order to protect the worker and their family. Employers of Microenterprises defined in Article 120 of the Labor Code must pay to the Individual Capitalization Labor Reserve Sub-accounts of each of their workers the percentage determined by the Economic and Social Council (CES). The value constituted by the employer as an accrued benefits bonus must be received by the worker upon termination of the labor relationship for any of the causes indicated in the Labor Code in which payment of said bonus is appropriate, as provided in this Law. The individual capitalization labor reserve provided for in this Article, as well as the use and disposition of the resources in accordance with what is established in Articles 120 reformed, 120-A and 120-B of the Labor Code, including the rights previously acquired by workers, must be resolved in the terms provided by these provisions, prior to their reforms. The provisions contemplated in this Chapter are not applicable to workers regulated by the Civil Service Law, nor to employers and public officials of decentralized bodies and other public entities subject to special contracting modalities and regulations.

GOVERNING BODIES OF THE HONDURAN SOCIAL SECURITY INSTITUTE (IHSS).- The bodies for strategic planning, direction, administration and management of the Honduran Social Security Institute (IHSS) are:

• 1)

  Social Security Council (CSS);

• 2)

  Board of Specialists;

• 3)

  Managers of each of the Insurance Programs;

• 4)

  Specialized Technical Committees; and, 5) Systems of audit and control. The Social Security Council (CSS) is the strategic body of superior direction responsible for approving, planning and establishing institutional policies, as well as guaranteeing the fulfillment of the rights of participants and contributors. The Council is composed of eleven (11) members, selected based on competence and professional capacity, as well as in accordance with the Regulation issued for such purposes by the Economic and Social Council (CES), guided by the ratification of merits by suitability, in accordance with the following representation:

  • 1)

    Three (3) representatives by labor unions: General Confederation of Workers (CGT), Confederation of Workers of Honduras (CTH) and Unitary Confederation of Workers of Honduras (CUTH);

  • 2)

    Three (3) representatives by the Honduran Private Enterprise Council (COHEP);

  • 3)

    Three (3) representatives by the Government; and,

  • 4)

    Two (2) representatives of Retirees and Pensioners of the Honduran Social Security Institute (IHSS). The Board of Specialists is composed of three (3) members and is the superior body of administration and execution, who must be selected through public competition, based on merits that promote the selection of a multidisciplinary team, with adequate suitability, honorability and competence of its members, who must be nominated for a period of four (4) years and may remain in their positions, overlapping government periods through objective evaluation by the Social Security Council (CSS), based on favorable indicators regarding their results, in order to guarantee high standards of administration and management of resources. The Board of Specialists and the officials of the audit and control systems must be of exclusive dedication and with functions incompatible with or without office with any other paid activity in the public or private sector. The functions and competencies of the Social Security Council, the Board of Specialists and the Specialized Technical Committees, in the context of this Law, must be defined in the Social Insurance Law and its Regulations.

SUPERVISION AND CONTROL OF THE SOCIAL PROTECTION SYSTEM.- The Secretariats of State and other executing entities of the plans and programs of the Social Protection System must be audited, reviewed, verified, supervised, monitored and inspected by the Superior Court of Accounts (TSC) and other controlling and inspecting bodies of the State, within the scope of their legal competencies. The operations carried out for the granting of benefits derived from the Social Protection System, through the Honduran Social Security Institute (IHSS) and other financial institutions that administer pensions and services derived from the Collective Capitalization Plan and the Complementary Labor Coverage Plan, must be reviewed, verified, supervised, monitored and inspected by the National Banking and Insurance Commission (CNBS), through a specialized Superintendency in Pensions and Securities, created for such purposes, within the framework of the organic law and other applicable legal regulations. The operations carried out for the granting of benefits derived from the Health Care Insurance Regime, by the responsible managing and executing entities, regarding the provision and quality of services, enabling, certification and accreditation of the same, derived from the Law, Regulations and other applicable regulations, must be reviewed, verified, controlled, monitored and inspected by the Health Superintendency.

AUDIT AND SOCIAL OVERSIGHT.- In order for there to be instances of participation and social audit for each use of the regimes and pillars of the system, the Economic and Social Council (CES), guaranteeing the tripartite participation of the sectors, must ensure that in all pillars and management plans of the new System, as well as in its public, private or mixed Administrators, the objectives for which said institutions were created and articulated are met, based on results management, from the economic, financial and social point of view. Additionally, the Economic and Social Council (CES) must propose to the National Council for Coordination and Articulation of Social Policies (CONCAPS), as appropriate, technical recommendations, alternative solutions and reforms to the legislation that allow adjusting the Regime to the constant changes and needs that arise from it. The entities with social audit functions, referred to in this Article, must monitor and, where applicable, report to the competent authorities or proceed legally as appropriate, in order to maintain the integrity of the System. For such purposes, the aforementioned entities may request from the National Banking and Insurance Commission (CNBS) the pertinent information, including examination reports, statistical reports, external auditor reports and other information necessary to comply adequately with the purpose required by this Law.

THE NATIONAL ASSOCIATION OF SOCIAL SECURITY INSTITUTES.- The National Association of Social Security Institutes is hereby created, which is composed of all Public Social Security Institutes in the Country, with the object of ensuring the proper compliance with their own Laws and Regulations, in order to guarantee the rights of their affiliates. Its organizational structure, functions and competencies must be established in the regulations issued for such purposes by said Association.

RESPONSIBILITIES.- Individuals, authorities, public employers who are related to and/or hold positions in the Social Protection System and those natural or legal persons who manage reserves or resources of said System, as well as service providers of any nature, are civilly, administratively and criminally responsible for their actions and omissions in compliance with the legal, regulatory or normative provisions that correspond, and consequently, are personally liable for the damages and losses caused to the System and its Institutions and jointly liable with it before third parties. The Social Insurance Law and the Law of Severance and Pension Fund Administrators of the Complementary Benefits Pillar must establish the regime of infractions and penalties corresponding to the officials and employees of said institutions.

EMPLOYER RESPONSIBILITY OF THE WORKER AND OF THE BENEFICIARIES OF THE SYSTEM.- The sponsor who fails to comply with the obligations of affiliating their workers to the System, retains or fails to remit employer contributions and individual quotas, incurs administrative, civil and criminal responsibility, as provided by applicable legislation. The worker and the beneficiaries of the System who fail to comply with the obligations provided for in this Law, the Social Insurance Law and other regulations of the Social Protection System, incur the administrative, civil and criminal responsibilities determined by the corresponding law.

EQUITY AND INVESTMENT OF RESERVES.- The equity of the Social Security Institutes and the reserves constituted by the different income, individual quotas, employer contributions and contributions of the State, which form the Social Protection System, are separate and independent from the Public Treasury and must be used exclusively for the purposes provided in this Law, the Social Insurance Law, its Regulations and other applicable regulations. The investment portfolio constituted by the reserves of the Public Social Security Institutes must be invested under the best conditions of security, liquidity and profitability, at valuation of said investments authorized by Law or by regulation of the National Banking and Insurance Commission (CNBS), those that result in greater social benefit to participation, as well as the realization of economically profitable projects with high impact on the country's development. The payment of the State's obligations that derive from the application of this Law must be honored in the time and manner established in the Social Insurance Law. Those transactions for payment of obligations to the Public Social Security Institutes are prohibited, through securities or Government bonds, whose general valuation conditions produce disadvantages with respect to the real situation of the market of its affiliates, and therefore contrary to the interests of the continuity of the system of its affiliates.

SEPARATION OF FUNDS.- To guarantee transparency, ethics and adequate administration of resources, as well as the self-sufficiency of the Regimes and Pillars of the System, the resources of the Regimes and Pillars of the System, the funds from the Contributory Pillar and the Subsidized Pillar, in order to guarantee the ordering and interaction of mechanisms of community social participation, optimizing the institutional supply and use of resources, with respect to the demand of the population in general.

SOLIDARITY AND SOCIAL PROTECTION FUND FOR POVERTY REDUCTION.- For financing of the Social Protection Floor Regime (PPS), the Secretariat of State in the Office of Finance must consider in the General Budget Project of Income and Expenditures of the Republic that will be sent to the National Congress, the budgetary allocations to proceed with the financial strengthening of the Solidarity and Social Protection Fund for Poverty Reduction, which must be constituted and inspected in accordance with what is established:

• 1)

  The value resulting from the product of the State's solidarity contribution as such, to which Title V of "The Law of Public Finance Ordering, Control of Exemptions" contained in Decree No. 278-2013 of December 21, 2013 refers;

• 2)

  The State's solidarity contribution, according to the equivalent value resulting from applying twenty percent (20%) of the profitability of new concessions granted by the State of Honduras to third parties, as of the entry into force of this Law, regardless of their nature or origin;

• 3)

  The value resulting from applying fifteen percent (15%) of the actual profitability generated on non-financial investments concessioned by the State to the Social Security Institutes, in excess of four point five percent (4.5%) of the technical interest required of said institutes by the National Banking and Insurance Commission (CNBS);

• 4)

  The additional contributions that are allocated in the General Budget of Income and Expenditures of the Republic for the strengthening of the Social Protection Floor (PPS), which must be assigned in accordance with the financial capacity of the State; and,

• 5)

  Other sources of financing such as: Loans, contributions and subsidies from institutions; donations, inheritances and legacies, as well as national and international cooperation of lawful origin, from natural or legal persons, public or private, or that account through special report in accordance with the standards and procedures regulated by the Superior Court of Accounts (TSC) or the competent body that must provide the cooperation, and others obtained legally for any reason. The values contributed by the State to the Solidarity and Social Protection Fund for Poverty Reduction must be reviewed and adjusted annually by the National Council for Coordination and Articulation of Social Policies (CONCAPS), so that the same are associated with economic growth and maintain adequate balance between the population served and the fiscal capacity of the State. These values must be deposited in the Central Bank of Honduras (BCH) or in one or more banks of the National Financial System, through a Trust, in order to guarantee that the economic resources collected are invested in the best administrative conditions and profitability, security and liquidity. Municipal corporations that wish to benefit from the benefits of the programs and benefits of the Social Protection Floor (PPS) must establish coordination agreements with the Secretariat of State in the Office of Development and Social Inclusion, in which case authorization must be granted to the Secretariat of State in the Office of Finance to deduct from the cost of the benefits granted and from the budgetary items of municipal transfers, from the budgetary items of municipal transfers, from the budgetary items of municipal transfers, from the budgetary items of municipal transfers, from the budgetary items of municipal transfers, recorded in the General Budget of Income and Expenditures of the Republic.

NORMS AND BUDGETARY AVAILABILITY.- All rights and beneficiaries of social assistance that derive from this Law are of a priority nature and are subject to budgetary availability, within the framework of the General Budget of Income and Expenditures of the Republic, of each fiscal year. Without prejudice to the above, due to the proper nature as risk managers of the Social Security Institutes, whose funds are associated with actuarial measurements, any budgetary norm or provision that restricts said Institutes from achieving the essential objective of paying benefits on time and in the manner provided by their Law, as well as the investment of their technical reserves, shall be applicable to the aforementioned Institutes.

INALIENABILITY.- No Power of the State may burden or pledge the reserves or income of the Social Security Institutes of the Social Protection System. The assets, funds and income of said Social Security Institutes that form the Social Protection System are imprescriptible and must be used exclusively to provide the corresponding social benefits. The accounts and reserves constituted, as well as the benefits granted, within the framework of this Law, the Social Insurance Law and its Regulations, cannot be transferred, compensated or garnished, except for the special provisions established by the Social Insurance Law and its Regulations, as well as the Labor Code and the Code on Children and Adolescents, up to the percentages established in it and for the obligations fixed by the same.

REGISTRATION AND UNIFIED COLLECTION SYSTEM.- Based on the technical specifications defined by the National Council for Coordination and Articulation of Social Policies (CONCAPS), the National Information Center of the Social Sector (CENISS), together with the Honduran Social Security Institute (IHSS), must carry out the actions that allow the implementation of the Registry of Participants of the Social Protection System. Said Registry must be the basis and give rise to the Unified Collection System of contributors in matters of Social Protection, provided that the certification of the base is verified or checked in the National Registry of Persons (RNP). The Honduran Social Security Institute (IHSS) and the National Information Center of the Social Sector (CENISS) must establish jointly the conditions and requirements to be met by the entities that make up the Institutionality of the Social Protection System, so that they provide the information they manage in their records, to guarantee that the Registry of Participants of the Social Protection System has complete, adequate, reliable and timely information and becomes a tool for the control and compliance of the obligations that by Law correspond to it in matters of social protection for the fight against evasion. The contribution of support, unjustification and other preventive measures to the registry that it establishes.

EDUCATIONAL FUND FOR SOCIAL SECURITY.- The Educational Fund for the Promotion of Social Security (FEPSS) is hereby created, which has as its purpose to provide education in essential principles and values for the sustainable development and continuous improvement of social security for the Honduran population. The Educational Fund for the Promotion of Social Security (FEPSS) must be constituted with the annual contributions made by Public Pension Institutes and Administrators of Pension and Severance Funds, and their Regulations and other applicable regulations. Without prejudice to the obligations derived from the provisions established in Title VI "Of the Labor Coverage Insurance Regime" of this Law, the contributions of employers and workers who earn a salary or money or in kind of both genders and who provide their services to a natural or legal person, regardless of the type of labor or service relationship that binds them and the form of remuneration, as well as the legal person regardless of the economic nature of the employer, company or public, private or mixed institution that uses their services. To the contributions of employers and workers is added that made by the State as employer, as well as the solidarity contributions that it makes to the Social Protection System, in its capacity as State, to subsidize groups of workers in situations of socioeconomic vulnerability. The Educational Fund for the Promotion of Social Security (FEPSS) must be constituted with the annual contributions made by Public Pension Institutes and Administrators of Pension and Severance Funds during the first quarter of each year. The contribution to the Educational Fund for the Promotion of Social Security (FEPSS) is equivalent to three percent (3%) of the administrative expenses incurred by said institutes, calculated at the close of December of the immediately preceding year and paid in the month of January of each year, in accordance with the guidelines approved by the Executive Power in Council of State Secretaries, at the proposal of the Social Security Council (CSS). The values that constitute the Educational Fund for the Promotion of Social Security (FEPSS) are distinct and independent of the Public Treasury, from the moment of their collection and must be deposited in the Central Bank of Honduras (BCH) or in one or more Banks of the National Financial System, to be accounted for and invested separately, as corresponds to the purposes stated in the previous items, through a specialized and independent Trust Administration for each of the three (3) cases, whose Special Trust Technical Committee appointed for such purposes by the Social Security Council (CSS) is responsible for the administration, supply and investment of the Educational Fund for the Promotion of Social Security (FEPSS), in accordance with the regulations and public policies approved by the Executive Power in Council of State Secretaries, at the proposal of the Social Security Council (CSS). CHAPTER VIII OF THE PLAN FOR THE SOLIDARITY PROMOTION OF SPORTS AND MUTUAL ASSISTANCE (PRO-SOLIDAR PLAN)

PLAN FOR THE SOLIDARITY PROMOTION OF SPORTS AND MUTUAL ASSISTANCE.- In addition to the Minimum Social Protection Floor Regime (PSS) referred to in Title II of this Law, and the assistance plans derived from it, the System must contemplate for preventive purposes and social inclusion as appropriate, the implementation of the Plan for Solidarity Promotion and Mutual Assistance (PRO-SOLIDAR Plan). Said plan has as its purpose to advocate for the universalization of coverage, through the gradual and progressive affiliation of workers excluded from Social Security, the improvement of the Comprehensive Public Health Network, direct care of temporary homes for elderly adults and children in situations of vulnerability and rights violations, and investment in sports infrastructure, equipment and education that promotes prevention.

FINANCING OF THE PLAN.- For the financing of the benefits derived from the Plan for Solidarity Promotion and Mutual Assistance (PRO-SOLIDAR Plan), the Fund of the Plan for Solidarity Promotion and Mutual Assistance is hereby created. The PRO-SOLIDAR Plan Fund must be constituted and strengthened with the equivalent of the following income sources:

• 1)

  Solidarity Contribution of the State as such, constituted by the equivalent monthly value of twenty percent (20%) on the totality of fees, rates and similar amounts generated by new concessions granted by the State of Honduras to third parties, as of the date this Law becomes effective, regardless of their nature or origin;

• 2)

  Solidarity Contribution of the State as such, constituted by the value resulting from applying fifty percent (50%) to the totality of new income generated to the national budget, as a result of the cancellation, reduction, settlement or expiration of fiscal exemptions that occur as of the date this Law becomes effective;

• 3)

  Additional solidarity contributions that are included in the General Budget of Income and Expenses of the Republic for the purposes of universal coverage of low-income workers and those in situations of high socioeconomic vulnerability; and,

• 4)

  Other sources of financing such as: Contributions, quotas, fees and/or subsidies from institutions; donations, inheritances and legacies, as well as national and international cooperation of lawful origin, from natural or legal persons, public or private, or that provide an accounting through special report in accordance with the standards and procedures regulated by the Superior Court of Accounts (TSC) or the competent body that must provide the cooperation, and others that are obtained legally in any manner.

MINIMUM BASIS OF STATE SOLIDARITY CONTRIBUTION.- In no case can the State's solidarity contribution be less than the equivalent of the sum of zero point five percent (0.5%) of the total employer contributions and individual fees made to the Private Contribution Regime (RAP) as provided in Article 43 of this Law.

DESTINATION, ADMINISTRATION AND OVERSIGHT OF PRO-SOLIDAR PLAN FUNDS.- The Funds of the Plan for Solidarity Promotion of Sports and Mutual Assistance (PRO-SOLIDAR Plan) must be designated solely and exclusively for the following purposes:

• 1)

  Seventy percent (70%) of the total amount collected, to encourage and promote gradually and progressively the universal coverage of low-income workers and those in situations of high socioeconomic vulnerability;

• 2)

  Twenty percent (20%) for the financing of day centers and temporary homes for the care of the elderly in situations of abandonment or rights violations; and,

• 3)

  Ten percent (10%) for the creation, maintenance and physical infrastructure, equipment and organization for preventive and sports purposes of social protection. The values that constitute the Fund of the Plan for Solidarity Promotion of Sports and Mutual Assistance (PRO-SOLIDAR Plan) are distinct and independent of public treasury, from the moment of their collection and must be deposited in the Central Bank of Honduras (BCH) or in one or more Banks of the National Financial System, to be accounted for and invested separately, as corresponds to the purposes stated in the previous items, through a specialized and independent Trust Administration for each of the three (3) cases, whose Special Trust Technical Committee appointed for such purposes by the Social Security Council (CSS). The contract of said Trust, as well as the regulations that establish the operations of each of its components, must be approved by the Social Security Council (CSS), following favorable opinion from the National Banking and Insurance Commission (CNBS). The Social Security Council (CSS) must ensure that the resources of the different sub-trusts are collected, administered and invested in accordance with Law. For such purposes, it must ensure that an annual external audit is contracted at the expense of the respective fund by an audit firm authorized by the National Banking and Insurance Commission (CNBS), in order for a report and corresponding opinions to be issued on the management and use of each of the funds. CHAPTER IX OF FISCAL EXEMPTIONS AND OTHER BENEFITS PROMOTING FORMAL AFFILIATION TO SOCIAL SECURITY

FISCAL INCENTIVES.- The contributions made to individual accounts of the Complementary Coverage Pillar and those made to constitute the labor reserve must be deductible one hundred percent (100%) from taxable net income, for purposes of Income Tax, as determined by law. The Honduran Social Security Institute (IHSS) is exempt from the payment of all classes of taxes, duties, fees, municipal taxes and public charges, including stamp paper, stamps and registrations, as well as tax fees associated with electronic transfers or similar. Likewise, Special Purpose Entities are exempt from being taxed with all classes of taxes, duties, fiscal and municipal fees and public charges, including stamp paper, stamps and registrations, as well as tax fees associated with electronic transfers or similar, when their capital is totally contributed by the pension institutes, for the purpose of executing works and infrastructure projects that generate socioeconomic development for the country, which are formed as of the publication of this Law. CHAPTER X OF COMPLEMENTARY LAWS

SUBMISSION TO THE NATIONAL CONGRESS OF OTHER COMPLEMENTARY LAWS.- As of the date this Law becomes effective, the Executive Power must submit to the National Congress, for its corresponding discussion, within a maximum period of eighteen (18) months, in order of the respective. The initiatives on the following laws:

• 1)

  Social Insurance Law;

• 2)

  Law of the National Health System;

• 3)

  Law of the Administration of Pension and Severance Funds;

• 4)

  Law of Traffic Accident Insurance; and,

• 5)

  Other complementary laws or reforms that are required for the integral application of the System. CHAPTER VI OF REFORMS, REPEAL AND EFFECTIVE DATE OF THE LAW

COVERAGE FOR CHILDREN.- In fulfillment of the rights of children and constitutional guarantees, as well as international agreements and conventions aimed at protecting human rights of the population, it is established in the approval of the new Social Insurance Law, the coverage of human and constitutional rights, such that children affiliated with the Social Protection System, until they reach eighteen (18) years of age, thus having access to the benefits and services offered, and children who remain in conditions of high degree of special capacity or terminal or chronic incapacitating illness, in which case coverage must be without age limit.

EFFECTIVE DATE.- This Law shall become effective forty-five (45) days after its publication in the Official Gazette La Gaceta. Given in the city of Tegucigalpa, municipality of the Central District, in the Chamber of the National Congress, on the twenty-fourth day of the month of May of two thousand fifteen. ANTONIO CESAR RIVERA CALLEJAS PRESIDENT JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY SARA ISMELA MEDINA GALO SECRETARY To the Executive Power. Therefore: Let it be executed. Tegucigalpa, M.D.C., July 2, 2015. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE STATE SECRETARY IN THE OFFICE OF LABOR AND SOCIAL SECURITY NOTICE OF SUPPLEMENTARY TITLE The undersigned, Secretary of the Court of Letters of Ocotepeque, to the general public and for purposes of Law. HEREBY DECLARES: That Mr. MARCO TULIO MONTUIFAR has requested a Supplementary Title for the following real property "INSERTIONS".- An area of land located in the village of Queserias, municipality of San Fernando, Ocotepeque, consisting of thirteen blocks with eighteen hundredths of a block of surface area. The boundaries are as follows: To the North, bordering with Mrs. María Luisa Posadas, Francisco Padilla and Donato Padilla, to which access is provided on the municipal side and with property of Mr. Arcés Abel Pinto Santos, with a street in between; to the East, with property of Messrs. Juan José Hernández Guerra, José Antonio Lara and José Ebelio Padilla; to the West, bordering with property of Mr. Gilberto Peña España and with a street that provides access to other properties. Queserias Legal Representative Atty. EDGAR ULISES MEJÍA GUEVARA. Ocotepeque, March 25 of the year 2015. CARLOS ENRIQUE ALDANA, SECRETARY DEPARTMENTAL COURT OF LETTERS OF OCOTEPEQUE 2 M, 2 J and 2 J 2015.