Attention! Applying for self-insurance must be done before March 31, 2022 (the pros and cons listed)

You still have until March 31 to submit your application to become self-insured as of July 1, 2022. Employers may consider carrying the excess for the Work Resumption Partially Disabled (WGA) and/or the Sickness Benefits Act (ZW) and/or (even) the unemployment benefits. As a self-insurer, you pay less premium, but bear any benefits yourself. In this blog we discuss some of the advantages and disadvantages of self-insurance for the WGA and/or ZW.

Self-insured ZW

The employer who chooses to be self-insured for the Sickness Benefits Act takes responsibility for administering the Sickness Benefits Act for its employees. For example, the self-risk carrier is given an independent reintegration task.

The main advantage of being self-insured is the lower differentiated premium Werkhervattingskas. You do not have to pay the ZW flex premium. However, self-insurance also means that you have to pay the benefits under the Sickness Benefits Act for your (former) employees. In that case, you pay 70% of the daily wage of the employee in question. Furthermore, you have to take into account other additional costs. An own-risk carrier needs knowledge of the Sickness Benefits Act and will have to acquire this in-house. It is also necessary to keep records related to absenteeism.

You are responsible for the benefits of sick employees whose employment ends during illness. Employees who become ill within 4 weeks of leaving employment are also your responsibility. However, not every benefit of sick employees is borne by the self-insurer. For example, the UWV assumes benefits for employees who are sick due to pregnancy and/or childbirth.

Opting for self-insurance for the Sickness Benefits Act can be advantageous when the likelihood that employees will have to use Sickness Benefits is limited, while the employer must incur (relatively) high costs to do so.

WGA self-insurer

Employees who have been sick for two years are entitled to WGA benefits, provided they meet the conditions under the Work and Income according to Capacity for Work Act (WIA). Employers have the option to bear the risk of paying the WGA benefit themselves. As with self-insurance for the Sickness Benefits Act, the choice depends on a financial consideration.

Employers normally pay a WIA premium, which consists of a basic premium and a more differentiated premium. The differentiated premium depends on the risk of employees having to use WIA benefits. The self-insurer for the WGA initially saves costs. After all, as a self-insurer, you do not have to pay the differentiated premium, leaving only the basic premium. The basic premium is the standard premium you pay for the WIA over your employees' wages. The (fixed) percentage of that premium depends on the size of the company.

This is offset by the risk of other costs. As an own-risk carrier, you are responsible for the payment of benefits and for the reintegration of your (former) employee for 10 years after the continued payment of wages during illness. However, it is possible to insure the financial risks related to the WGA benefit with private insurers.

Furthermore, you acquire the responsibility to monitor your employee's compliance with the legal obligations. In addition, unlike the excess carrier for the Sickness Benefits Act, you have the power to impose measures on employees who do not comply with those obligations. Think, for example, of the partial and/or temporary denial of WGA benefits in the case of an employee who does not cooperate in an examination for occupational disability.

Also when you consider becoming self-insurer for the WGA, the consideration is mainly a financial one. On the one hand, you save costs on the premium and have more control over the reintegration of (ex-)employees. On the other hand, you bear the risk of having to pay benefits to (ex-)employees for 10 years.

Application for self-insurance

Employers can start or stop being self-insured twice a year, July 1 and January 1. The application to start on July 1, 2022 must be received by the Tax Office by March 31, 2022. The Tax Office approves or rejects the application. The choice to become self-insurer depends heavily on the risk of employees claiming benefits and the extent to which costs are saved by paying fewer premiums. When considering becoming self-insurer, you must take into account the works council (OR).

Our team Labor is happy to help you with questions or with advice if you are self-insured or are considering becoming self-insured. Please feel free to contact us using the form below.