Daily sickness allowance for the self-employed: waiting period, amount, health questions

Why the self-employed have to arrange a daily sickness allowance themselves

Employees have a statutory right to continued payment of salary during illness: the employer pays three weeks in the first year of service, and an appropriately longer period after that (Art. 324a of the Code of Obligations, CO). Many employers replace this obligation with collective insurance. As a self-employed person, you have neither. Basic health insurance pays for the doctor and the hospital, but never for loss of earnings. That is why SECO’s SME portal recommends daily sickness allowance insurance to entrepreneurs.

The daily allowance is a fixed amount per day of incapacity for work. You are unable to work if, because of impaired health, you can no longer do your previous work in full or in part (Art. 6 of the Federal Act on the General Part of Social Insurance Law, ATSG); a medical certificate confirms this. You can take out the insurance in two legal forms:

Each insurer decides for itself which daily allowance amounts and waiting periods it offers in which form; you find out with a quote. The KVG form protects you better with regard to acceptance and reservations; the form under the Insurance Contract Act (ICA) leaves more room for manoeuvre on amount and duration.

Step by step to the right daily sickness allowance

1. Calculate your needs. Add up what keeps running if you are off work: living costs, workshop rent, leasing, premiums, AHV contributions. Divide the annual amount by 365. That is the daily allowance you need at a minimum.
2. Check your reserves and choose a waiting period. The waiting period is the time during which no daily allowance is paid yet. The longer it is, the lower the premium (Art. 76 para. 2 KVG). Only choose as many days as you can pay from your reserves.
3. Use your right of transfer if you are coming from employment. If you were collectively insured under the KVG through your employer, you may transfer to individual insurance within three months of the written notification, without new reservations and with your previous age at entry (Art. 71 KVG).
4. Compare quotes. Ask several health insurers and insurers, always with the same daily allowance, the same waiting period and the same benefit duration. You will find the insurers’ contact details in the health insurer profiles.
5. Clarify fixed-sum or indemnity insurance. With fixed-sum insurance, the insurer pays the agreed daily allowance. With indemnity insurance, it pays at most the loss of income you prove, for example with your accounts and tax assessment. The insurer must tell you which form applies before you sign the contract (Art. 3 para. 1 let. b ICA).
6. Answer the health questions in full. More on that in the next section.

Health questions: what you have to declare

When you apply, the insurer gives you a health questionnaire. Under the ICA, you must disclose all facts asked about that are material to the risk, insofar as you know them or ought to know them (Art. 4 para. 1 ICA). Whatever the insurer asks clearly and unambiguously is deemed material (Art. 4 para. 3 ICA). If you conceal something or state it incorrectly, the insurer may terminate the contract within four weeks of finding out; for illnesses connected with the concealed fact, there is then no benefit either (Art. 6 ICA).

In KVG daily allowance insurance, too, the health insurer asks about your health, because it may add reservations. A reservation excludes a specific illness that exists at the time of acceptance or that experience shows leads to relapses. It only applies if it is communicated to you in writing and names the illness and its start and end precisely, and it lapses after five years at the latest (Art. 69 para. 1–3 KVG). If you later increase the daily allowance or shorten the waiting period, the insurer may add a new reservation for the additional part (Art. 69 para. 4 KVG).

Sample calculation: waiting period of 30 or 60 days?

Example with fictitious people. Sandro is 42 and runs a sole proprietorship as a carpenter. His income is CHF 90,000 a year (assumed). He wants to insure 80 % of it and compares two waiting periods. He is then fully unable to work for 90 days because of an illness.

The calculation only shows the mechanism. How you choose the waiting period depends on your reserves, not on a rule of thumb. If Sandro is only 50 % unable to work, he receives half the daily allowance under the KVG form, and cover for his remaining capacity to work continues (Art. 72 para. 4 KVG).

Special cases

Pregnancy and birth

In KVG daily allowance insurance, the health insurer must also pay the insured daily allowance for pregnancy and childbirth if you were insured for at least 270 days up to the birth without an interruption of more than three months. The daily allowance runs for 16 weeks, at least eight of them after the birth, and is not counted towards the 720 days (Art. 74 KVG). For ICA contracts, the general terms and conditions govern whether and how maternity is covered.

Accident

KVG daily allowance insurance may be limited to illness and maternity (Art. 72 para. 1 KVG). For accidents, a daily allowance from voluntary accident insurance covers you; the options are shown in the article Accident insurance for the self-employed. You can check your accident cover in basic health insurance with Suspending or including accident cover.

Changing jobs, unemployment and age

If you change insurer because you start or leave a job, the new KVG insurer may not add new reservations (Art. 70 para. 1 KVG). If you become unemployed, you can switch your KVG daily allowance insurance to benefits starting from day 31 without a health check (Art. 73 para. 2 KVG). After your 65th birthday, it is no longer possible to take out new insurance under the KVG (Art. 67 para. 1 KVG).

Cancellation and switching

Under Art. 35a para. 1 ICA, you can cancel insurance under the ICA at the end of the third or any subsequent year with three months’ notice, unless the contract provides for a shorter commitment. If your daily allowance counts as supplementary insurance to social health insurance, only you have the right to give ordinary notice, not the insurer (Art. 35a para. 4 ICA). Ask your insurer whether this applies to your contract. Never cancel before the new insurance has been confirmed in writing.

Common mistakes

• Relying on your health insurer. Basic health insurance pays for treatment, not for loss of earnings.
• Choosing a waiting period that exceeds your reserves. The premium falls, but you bear the first weeks of an illness alone.
• Setting the daily allowance too high. With indemnity insurance, the insurer pays at most the proven loss; a higher premium then gets you nothing. Under the KVG, the insurer reduces benefits in the event of overcompensation (Art. 72 para. 5 KVG).
• Answering health questions inaccurately. An incorrect statement can lead to termination and loss of benefits (Art. 6 ICA).
• Cancelling the old contract before you have the new commitment. Anyone left without cover while ill risks reservations or rejection on the new application.

How daily sickness allowance, accident and basic health insurance interact when you start out is shown in the article Becoming self-employed. You will find all articles for the self-employed in the Self-employed and SMEs section. You can compare your basic health insurance in the premium calculator. If you would like to discuss quotes for a daily sickness allowance, you can request advice.