Medical and rehabilitation allowance
Sometimes people are unable to attend school. For example, because:
they have an illness
they were in an accident
they experienced trauma
These people may be able to receive medical and rehabilitation allowance.
The system changed on 1 September 2025.
That is when the medical and rehabilitation allowance replaced the rehabilitation pension.
People can receive payments while:
they are in approved treatment
for example:
they are waiting for treatment
they are waiting for rehabilitation
they are ill
they are looking for work after treatment or rehabilitation
I receive a rehabilitation pension.
However, this changed on September 1st 2025:
You will no longer receive a rehabilitation pension.
Instead, you will receive a medical and rehabilitation allowance.
Who is the medical and rehabilitation allowance for?
Are you unable to work because you are:
Then you may be able to receive a medical and rehabilitation allowance.
First, you must use all your sick leave rights at work.
Then you must use up the money from your sick-pay fund.
You can receive a medical and rehabilitation allowance while you:
are receiving medical treatment for an illness
are in rehabilitation
are waiting for treatment
are waiting for rehabilitation
are ill
are looking for work.
The medical and rehabilitation allowance is only for people who have lived in Iceland for at least 1 year prior.
How long can I receive a medical and rehabilitation allowance?
For a maximum of 60 months.
60 months is 5 years.
Are you in a very difficult situation?
Then you may be able to get an additional 24 months. 24 months is 2 years.
Have you completed your rehabilitation? While you are looking for work, you can get an additional 3 months.
However, you must first register with the Directorate of Labour.
Will I receive less money from the Social Insurance Administration if I am working?
The medical and rehabilitation allowance is income-related.
This means that your income can affect how much you receive from the Social Insurance Administration.
Examples of income are:
Your income has an exemption limit.
The exemption limit for new medical- and rehabilitation allowance is 42.080 ISKper month.
Of that amount, 168.320 ISKis for wages.42.080 ISK is for other income.
This is how the exemption limit works:
Are your wages less than 168.320 ISK per month?
Then you will not receive less money from the Social Insurance Administration.
Are your wages more than 168.320 ISK per month?
Then you will receive less money from the Social Insurance Administration.
You will still receive more money in total.
Is your other income less than 42.080 ISK per month?
Then you will not receive less money from the Social Insurance Administration.
Is your other income more than 42.080 ISK per month?
Then you will receive less money from the Social Insurance Administration.
You will still receive more money in total.
New medical- and rehabilitation allowance is divided into two parts.
Everyone receives new medical- and rehabilitation allowance.
Some people receive an additional payment.
The additional payment is called a home supplement.
Click below to read about the home supplement in easy-to-read language.
Home supplement
The home supplement is an allowance from the Social Insurance Administration.
The home supplement is 69.126 ISK per month.
The home supplement is in addition to other allowances from the Social Insurance Administration.
For example:
Can I get the home supplement?
Maybe.
The home supplement is for people who live alone.
The home supplement is also for people who live only with their children.
This means that the home supplement is not for people who live with other adults.
For example:
A husband
A wife
A boyfriend
A girlfriend
Other adults
Their children who are over 18 years old.
Note: Children aged 18-25 who are in school or vocational training are not counted.
Your housing situation also matters.
You must have a kitchen that only you use.
You must have a bathroom that only you use.
You also need to register your legal domicile where you live.
You can do this on the Registers Iceland website.
I live alone. I am not allowed to register my legal domicile where I live. Can I still get the home supplement?
In some places, it is not possible to register a legal domicile.
For example:
At a guesthouse.
In a summer house.
In that case, you need to register your legal domicile as unspecified.
You can do this on the Registers Iceland website.
Then, a public official must confirm where you live.
A public official is, for example:
A municipal manager
A social worker
The public official will notify the Social Insurance Administration.
Do you live alone?
Has a public official confirmed where you live?
Then you can get the home supplement.
Note:
You must notify the Social Insurance Administration when you move.
You must also notify the Social Insurance Administration when someone moves in with you.
Will I receive less money from the Social Insurance Administration if I am working?
The new medical- and rehabilitation allowance is income-related.
This means that your income can affect how much you receive from the Social Insurance Administration.
Income includes, for example:
Your income has an exemption limit.
The exemption limit for the new medical- and rehabilitation allowance is
New medical- and rehabilitation allowance - total exemption limit per month
per month.
Of this amount,
New medical- and rehabilitation allowance - exemption limit for employment income
is for wages.
New medical- and rehabilitation allowance - general exemption limit
is for other income.
This is how the exemption limit works:
Are your wages less than
New medical- and rehabilitation allowance - exemption limit for employment income
per month?
Then you will not receive less money from the Social Insurance Administration.
Are your wages more than
New medical- and rehabilitation allowance - exemption limit for employment income
per month?
Then you will receive less money from the Social Insurance Administration.
However, your total income will be higher.
Is your other income less than
New medical- and rehabilitation allowance - general exemption limit
per month?
Then you will not receive less money from the Social Insurance Administration.
Is your other income more than
New medical- and rehabilitation allowance - general exemption limit
per month?
Then you will receive less money from the Social Insurance Administration.
However, your total income will be higher.
Below are the main questions you might have.
Click on a question to read the answer.
It might be a good idea to read all the answers.
Q&A about medical and rehabilitation allowance - easy read
Are you unable to work because you are:
· very sick?
· have been sick for a long time?
· disabled?
Then you may be able to receive a medical and rehabilitation allowance.
First, you need to use all your sick leave from work.
Then, you need to use up the money from your sick fund.
You can receive a medical and rehabilitation allowance while you:
· are in treatment, for example with a doctor, due to illness
· are in rehabilitation
· are waiting for treatment, for example with a doctor, due to illness
· are waiting for rehabilitation
· are sick
· are looking for work after treatment or rehabilitation
Medical and rehabilitation allowances are only for people who have lived in Iceland for at least the last 1 year.
No.
The age-related supplement is not for people who receive the new medical- and rehabilitation allowance.
Payments from a pension fund are considered income.
Payments from a pension fund are included when calculating medical and rehabilitation allowances.
Is your income higher than the exemption limit?
Then you will receive less from the Social Insurance Administration.
However, you will receive more money in total.
Some people will still receive less under the new system.
These are people who receive very large amounts of money from a pension fund.
Note: Additional pension savings are not included.
A maximum of 60 months.
60 months is 5 years.
Are you having a very difficult time?
Then you might be able to get an additional 24 months.
24 months is 2 years.
Have you completed rehabilitation?
While you are looking for a job, you can get an additional 3 months.
However, you first need to register with the Directorate of Labour.
