What does the mandatory AOV involve?
The cabinet is currently drafting the bill. The compulsory AOV ensures that self-employed people must to insure against the risk of incapacity for work. This means that as a self-employed person you have a financial safety net if you are no longer able to work due to illness or an accident. The exact amount of the premium and the coverage amount have not yet been determined, but the aim is to keep it affordable for self-employed people (the expectation is between €200-€250 maximum).
The purpose of the mandatory AOV is to strengthen the social safety net for self-employed entrepreneurs. At the moment many self-employed people (zzp'ers) are not insured against incapacity for work, which means that in the event of illness or an accident they can run into financial difficulties. With the mandatory AOV the government wants to reduce this risk and ensure that self-employed people have better protection.
Key points of the current proposal
● The benefit amounts to a maximum of 70% of the most recently earned income – last month that you worked - and not more than the statutory minimum wage.
● At this moment the cabinet estimates
the premium
for the compulsory AOV at 7.5% to 8% of income up to the maximum contribution base. The maximum contribution base is 143% of the statutory minimum wage.
● The scheme applies to all entrepreneurs for income tax.
● A mandatory waiting period of one year is being introduced, during that period you will not receive any benefit.
● The criterion isnot occupationally disabled. If you can perform another kind of work, no benefit will be paid.
What does this now concretely mean for you as a freelancer?
You will receive a mandatory insurance policy, with a deductible of 1 year and a gross benefit up to the minimum wage. There is a high chance that you will not receive a benefit, because the person who assesses you finds that you can do other work. Based on these assumptions you will pay approximately €225 per month.
In many cases a minimum wage will not be sufficient to cover your living expenses. A deductible period of a year is also long. You will need to set aside a substantial amount to get through this time.
Mandatory or voluntary AOV?
In contrast to the mandatory version, a voluntary disability insurance (AOV) does cover occupational disability. This means that you receive a benefit if you are ill and cannot perform your own profession. You can also vary the waiting period, so you don't have to wait a year before receiving a benefit.
A voluntary AOV therefore offers better coverage and terms than the compulsory insurance. As it is currently described, you may also have a voluntary insurance, if it is equal to or better in coverage than the compulsory AOV.
An exact specification has not yet been given here by the cabinet, but…. an insurer can exclude pre-existing illnesses or ailments from the coverage of your AOV. If you wait to take out a voluntary AOV until the moment you must have insurance (2027-2029), then you will be 4 to 6 years older.
In these times anything can happen to you that leads to exclusions on a voluntary AOV. As a result, you are automatically driven into the arms of the compulsory AOV. After all, the compulsory AOV excludes nothing, and the coverage will therefore always be better than with an insurer who can impose an exclusion if you have been ill.
We are happy to help
At Circle8 we are ready to support self-employed professionals in understanding the mandatory disability insurance and finding a suitable policy. Feel free to contact us for more information and advice. We are happy to help you compare insurers and to clarify the costs of disability insurance.
