HomeFITNESSHow to know if you are in a situation of economic failure?

How to know if you are in a situation of economic failure?

The situation of economic insufficiency is a condition for receiving some support from Social Security. Know what it means.

THE situation of economic insufficiency it is one of the requirements of Social Security to grant some support, also having influence in determining the ability to pay expenses related to legal proceedings.

So, if you want to have access to any of these supports or if you have a low income, you should know under what conditions this requirement applies and how you can prove the situation of need.

The reference value used to define this condition is the Social Support Index (IAS). Is in a situation of economic insufficiency if the household has an average monthly income that does not exceed 1.5 x IAS. As, in 2023, the value of the IAS is 480.43 euros, the value then corresponds to 720, 65 euros.

Still, there are several factors that contribute to determining this yield. Let’s understand better how to see if you meet the criteria.

Situation of economic insufficiency: how to determine

The rules for determining the income and composition of the household, which, in turn, determine the situation of economic insufficiency are defined by law.

These rules are used to decide the allocation and maintenance of social supports or subsidies that are subject to means conditions.

They also apply to determine whether you have the financial conditions to support the costs of a lawsuit. If not, you may apply for legal protection. The application is also submitted to Social Security.

Thus, and in order to assess whether there is a situation of economic insufficiency, the average monthly income of the household must be taken into account. This value is obtained by dividing the household’s annual income by the number of elements that compose it and by 12 months.

The verification of the situation of economic insufficiency also applies to the maintenance of some of these subsidies and supports. That is, if income increases beyond a certain amount, you may stop receiving.

What income is considered?

The annual income results from the sum of several incomes, not limited to wages.

The verification of the situation of economic insufficiency and the calculation of the average monthly income of the household include income from dependent work, business and professionals, as well as income from capital or property and property increments.

With regard to property income, properties intended for the permanent residence of the applicant and the respective family are excluded. Equity increments (or capital gains) are considered even if they are exempt from taxation.

This sum also includes pensions, social benefits and housing allowances allocated on a regular basis.

Pensions include those for old age, disability, survivors, retirement, retirement, temporary or lifetime annuities or other benefits paid by insurance companies or pension fund management companies. The alimony you receive also goes into these accounts.

Who is part of the household?

For the purposes of determining the situation of economic insufficiency, it is understood that the household corresponds to what is described in the Article 13 of the IRS Code.

In other words, it includes spouses who are not legally separated, de facto partners and their dependents. In single-parent families, the household consists of the father/mother and dependents.

Remember that dependents also include civil stepchildren and godchildren who live with the support applicant.

How is the situation of economic insufficiency verified?

In order to be entitled to some support and subsidies, you will have to authorize the verification of the situation of economic insufficiency. Social Security will then consult the Tax Authority (AT) to confirm this situation.

This consultation takes place through the Public Administration Interoperability Platform. Therefore, the applicant does not have to share the access password to the Finance Portal or be present.

After receiving the request, AT calculates the average monthly income of the household and informs Social Security about the existence, or not, of the situation of economic insufficiency.

If it is not possible to confirm with the AT, Social Security may ask the applicant to present the evidence it considers essential to prove the situation of economic insufficiency.

How do I know if I am in a situation of economic insufficiency?

If you have already applied for support or a subsidy that required a situation of economic insufficiency, you can consult this information on your page on the Finance Portal.

To do so, you will have to access the website, authenticate yourself with your NIF and password. Then you can use the search bar at the top of the page and type “economic insufficiency”.

By clicking on “access” you will find the option “Economic insufficiency for user fees”. Click on “access” again and choose the year you want to consult and which will be, in principle, the last one in which you filed your IRS return.

Clicking on “more information” you will see the calculations made by AT, which include the average monthly household income and the limit value to correspond to the situation of economic insufficiency. You will then find out if you meet the necessary requirements.

Electronic Republic Gazette: Decree-Law No. 120/2018 – Establishes uniform rules for verifying the situation of economic insufficiency.

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