Mandatory Disability Insurance for Self-Employed Workers: What Does It Mean for You?

With the increasing number of self-employed workers (zzp’ers), the topic of mandatory disability insurance (AOV) has become a priority in the Netherlands. The government aims to introduce mandatory AOV coverage for self-employed individuals by no later than 2027, providing protection against income loss due to long-term disability.

This article offers an in-depth explanation of the key aspects of the AOV scheme, including eligibility criteria, costs, and implementation details based on the most recent guidelines.

What Is the Mandatory AOV Insurance?

The Basic Insurance for the Self-Employed Act (BAZ) aims to require self-employed individuals to obtain disability insurance. The purpose of the scheme is to provide income protection for those unable to work due to illness or injury, reducing the financial risks associated with long-term disability. Since self-employed individuals often do not enjoy the same social benefits as employees, this initiative acts as a safety net.

The proposal also aligns with improved social protection measures and forms part of the conditions for European financial support for post-pandemic economic recovery.

Coverage and Benefits

The mandatory AOV scheme will include the following features:

• Benefit amount:
  If a self-employed worker becomes fully disabled, the insurance will cover 100% of minimum wage, with a maximum of 70% of their last earned income or last reported profit. Payments continue until state pension age (AOW) if the disability persists.
• Waiting period:
  The scheme includes a one-year waiting period before benefits begin. During this time, the individual must cover their own expenses without insurance support.
• Assessment criterion:
  Disability will be assessed based on the individual’s ability to generate income in any profession, not only the one they currently work in.

Cost Implications

The maximum monthly premium for AOV is set at €195. However, the actual premium may vary depending on factors such as the person’s age, the risk level of their occupation, and personal circumstances.

Older workers or those in high-risk professions typically face higher premiums, while low-risk workers pay less. Importantly, premium costs are tax-deductible, offering financial relief to self-employed individuals.

For those who prefer private insurance, an opt-out option is available, provided their private policy meets or exceeds the minimum requirements of the public scheme.
Alternative arrangements, such as informal mutual aid funds or giving circles, do not qualify for exemption.

Who Is Affected?

The AOV will apply to all self-employed individuals who pay income tax (IB-entrepreneurs), including those who work together as partners. However, certain groups may be exempt:

• DGA’s (director-major shareholders):
  Individuals with substantial share ownership cannot be required to participate.
• Part-time entrepreneurs:
  Those who also hold salaried employment may be excluded.

The legislation aims for flexibility, taking into account the diversity of self-employed workers, including varying income levels, work types, and financial preparation.

Implementation Timeline

The government intends to implement the AOV on 1 January 2027. However, the legislation still requires approval from both the House of Representatives and the Senate.
If significant changes or adaptation options are added, implementation may be postponed to 2029.

Alternatives to Mandatory AOV

Currently, there is one alternative for those seeking options beyond the mandatory AOV:

Private AOV Plans

Private disability insurance offers the option to customise a policy to your specific needs, such as:

• shorter waiting periods
• higher benefit amounts
• additional coverage for specific conditions

This flexibility usually comes with higher premiums compared to the public scheme.

Costs vary depending on age, occupation, and health status.
While private plans may be more expensive, they offer more control over coverage and payout terms, making them appealing for self-employed individuals who want custom protection.

Why Make AOV Mandatory?

The push for mandatory disability insurance is driven by the fact that less than 50% of self-employed people in the Netherlands currently have any disability coverage.
Common reasons for low participation include high premium costs and a perceived low risk of disability.

By implementing a mandatory scheme, the government aims to:

• spread risks more evenly
• reduce costs
• ensure accessible coverage for all zzp’ers

Conclusion

The introduction of mandatory AOV marks a major change in the social security landscape for self-employed workers in the Netherlands. Although the law will not take effect until 2027, self-employed individuals can already begin preparing for the upcoming changes.

The goal is to reduce the financial risks and social costs associated with disability, while offering flexibility and choice to meet the diverse needs of the self-employed community.

Balancify helps entrepreneurs prepare for the new AOV scheme.

By offering practical support and personalised financial advice, entrepreneurs can make informed decisions for their business with fewer administrative worries.