Supplemental Social Protection for Self-Employed Workers
This article will explain in detail how self-employed individuals can protect themselves against life's uncertainties through voluntary supplementary social protection.
Self-employed workers, including freelancers and independent contractors, have basic mandatory social protection, but they can enhance their coverage by voluntarily enrolling in supplementary insurance schemes.
These supplementary plans can cover retirement, unemployment, work accidents, and occupational diseases, offering a level of protection equivalent to, or even better than, that of employees.
This article will explain in detail how self-employed individuals can protect themselves against life's uncertainties through voluntary supplementary social protection.
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Table of Contents
- Overview of Voluntary Supplementary Insurance
- Introduction to the "Madelin" Law
- New Retirement Savings Products
- Tax Deductions for Various Supplementary Insurances
- Major Insurance Providers
1. Overview of Voluntary Supplementary Insurance
Self-employed workers can enhance their social protection by enrolling in voluntary supplementary insurance plans. These plans cover areas such as retirement, unemployment, work accidents, and occupational diseases. By opting into these insurances, self-employed individuals can customize their protection according to their needs, achieving a level of coverage comparable to, or even surpassing, that of regular employees.
2. Introduction to the "Madelin" Law
The "Madelin" Law, enacted on February 11, 1994, allows entrepreneurs and their collaborating spouses to purchase group insurance contracts, with premiums being tax-deductible within certain limits. These "Madelin" contracts, available through insurance companies or mutual societies, help optimize social protection in areas such as retirement, disability, health, maternity, and unemployment.
3. New Retirement Savings Products
Since October 1, 2019, new retirement savings products have been gradually replacing "Madelin" retirement contracts, which ceased to be marketed after October 1, 2020. However, existing "Madelin" contracts can still be maintained, and contributions can continue to be made. The new individual retirement savings plans allow for early withdrawal of funds for the purchase of a primary residence or in life accident cases (e.g., disability, spouse's death, long-term unemployment). Additionally, the new plans offer more flexible withdrawal options, including lump sum, annuity, or a combination of both.
4. Tax Deductions for Various Supplementary Insurances
Retirement Insurance
Retirement insurance contributions are deductible up to the higher of the following two limits:
- 10% of taxable income, up to eight times the annual social security ceiling, plus an additional 15% on the portion of income between the social security ceiling and eight times that ceiling.
- 10% of the annual social security ceiling (4,113.60 euros in 2022) if taxable income is below the ceiling.
Provident Insurance (Health, Maternity, Disability, Death)
"Madelin" provident contracts ensure income during work stoppages and disability, and protect the family in case of death. Contributions are deductible up to the higher of the following two limits:
- 7% of the annual social security ceiling plus 3.75% of taxable income.
- 3% of eight times the annual social security ceiling.
Unemployment Insurance
Unemployment insurance contributions are deductible up to the higher of the following two limits:
- 1.875% of taxable income, up to eight times the annual social security ceiling.
- 2.5% of the annual social security ceiling.
Work Accident Insurance
Work accident insurance covers the risks of work-related accidents and occupational diseases, particularly for those engaged in high-risk activities like construction. The contributions for work accident insurance are deductible without any limit, providing almost identical benefits to those under the general scheme, except for temporary disability daily allowances.
5. Major Insurance Providers
GSC (Social Guarantee for Business Leaders)
Address: 42 Avenue de la Grande Armée, 75017 PARISPhone: 01 45 72 63 10This guarantee scheme, established by Medef and CGPME and later joined by UPA, offers benefits after 12 months of affiliation.
APPI (Association for the Protection of Independent Employers)
Address: 25 Boulevard de Courcelles, 75008 PARISPhone: 01 45 63 92 02This association provides protection for business leaders whose functions end due to collective procedures or limited cases of dismissal. Benefits are available after 12 months of affiliation, and members must be under 65 at the time of joining.
April Assurances
Address: 114 Boulevard Vivier Merle, 69439 Lyon Cedex 03Phone: 08 91 46 90 00
By participating in voluntary supplementary social protection schemes, self-employed workers can significantly enhance their level of protection, safeguarding themselves against various life risks. Understanding and utilizing these supplementary schemes can provide peace of mind in their professional pursuits and ensure they have sufficient economic security in the face of unforeseen circumstances.
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Whether you're a freelancer, startup, or established enterprise, Micco offers the tools and support needed to streamline financial operations and drive business growth. Check out Micco today to discover how it can complement your business banking needs.
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