The Internet consultation on the bill Basic Disability Insurance for the Self-employed (BAZ) generated a flood of responses. What should you know about the plans to introduce compulsory disability insurance for self-employed workers?

Why will there be a mandatory AOV?

The introduction of a mandatory AOV for self-employed workers stems from a proposal by the Labor Foundation. In fact, in June 2019, an agreement was reached between trade unions, employer organizations and the Cabinet. Part of this agreement was the introduction of a compulsory AOV for self-employed workers. i The purpose of this scheme is to protect self-employed workers against loss of income in case of disability. What many people do not know is that the compulsory AOV is a condition for receiving financial resources from the European corona recovery fund. The legislation must be passed by 2025, but implementation is not expected until between 2027 and 2029.

What does mandatory AOV entail?

The mandatory AOV is likely to have the following features:

• The compulsory AOV will cost a maximum of €195 per month; One year waiting period before benefits start100% of the legal minimum wage in case of full disability, with a maximum of 70% of last earned income or profit.
• Until state pension age for permanent disability.
• A stability contribution will be collected from private insurers (solidarity premium)
• Disability is assessed based on residual earning capacity in all occupations, not just one's own.

For whom will the AOV become mandatory?

The mandatory AOV will apply to all entrepreneurs who pay income tax, also known as IB entrepreneurs, including collaborating partners. Exceptions are likely for director-major shareholders (DGAs) and part-time entrepreneurs who work as self-employed workers in addition to salaried employment. Having employees or sufficient assets are not reasons not to participate in mandatory AOV.

What if the self-employed person already has an AOV or prefers to take out one himself?

There have been long discussions in the polder about an "opt-out arrangement" for self-employed persons who prefer to take out their own private insurance. The bill includes this possibility, but under the condition that the private insurance has at least the same conditions as the compulsory public insurance. Other provisions such as endowment circles or Brood Funds will not be sufficient to obtain exemption from compulsory AOV.