This article was originally published in The XPat Journal Autumn 2018 Issue
By Stephanie Dijkstra
The Dutch Social Security System
If you legally reside and/or work in the Netherlands then, in principle, you are subject to the Dutch social security system. That is, unless you are exempt under EC Regulation 883/2004 or a bilateral social security treaty (both of which you will read about further on). The same goes for your partner and/or other members of your family.
There are two kinds of compulsory social insurance schemes in the Netherlands. One is applicable to the population in general. This is called national insurance. The other is applicable to employees only. This is called employee insurance.
National Insurance Schemes
In principle, the national insurance schemes (volksverzekeringen) cover all persons living or working in the Netherlands. They are:
1. General Old Age Pensions Act (AOW)
If you are covered by the AOW, you are entitled to an old age pension once you reach a certain age. This age is being raised incrementally, starting from 66, in 2018, to 67 by 2021. A proposal regarding the age is currently pending. It would mean that, as of 2024, the pensionable age would depend on average life expectancy. Future recipients of the AOW will be informed about when they can expect to receive it five years in advance.
2. General Surviving Relatives Act (ANW)
If you are covered by the General Surviving Relatives Act (ANW), you are entitled to a widow’s, widower’s or ‘dependent children’s’ benefit. The deceased spouse, partner or parent must have been insured under the ANW at the date of his or her death.
The amount paid out on the basis of the benefit is a percentage of the legal minimum wage. However, the actual benefit can be less, since it is income-dependent.
3. Long-Term Care Act (WLZ)
This act makes a provision for those who need intensive care or supervision 24/7. For instance, elderly persons with dementia, or persons with severe mental, physical, hearing or seeing disabilities. It covers treatment and nursing in recognized institutions and nursing homes, personal care and nursing, the supply of artificial appliances, medical care, and transportation to the place of supervision or treatment. In order to receive this care, you must apply for it. If your application is approved, you are issued a ‘WLZ-indicatie’.
4. The Health Insurance Act (ZVW)
If you legally reside in the Netherlands and are subject to the Dutch social security system, you are obligated to have health insurance. It must be taken out with a ‘private’ health insurance company. These companies are obligated to supply everyone with a standard health insurance package, irrespective of their gender, age, or health. You can choose between two types of insurance policies, or a combination of these two:
- ‘Policy in kind’, whereby an insurance company enters into several contracts with healthcare suppliers and pays your medical bills directly
- ‘Restitution policy’, whereby you choose the healthcare supplier yourself, and pay their bills. After which, you will be reimbursed by your insurance company
You can also take out ‘additional’ health insurance, if you want to be covered for more than standard medical care. However, there is no ‘acceptance obligation’ for insurance companies, when it comes to additional insurance.
5. Child Benefit Act (AKW)
In principle, this benefit (Kinderbijslag) is for children under the age of 18. The size of the allowance depends on the age of the child. Special rules apply to children aged 16 and 17.
How are National Insurance Schemes Financed?
Contributions for the national insurance schemes, of up to € 9,399 (max), are levied on incomes of up to € 33,994 per year. They are charged together with income tax, and are therefore paid to the Dutch tax authorities.
The ZVW (Health Insurance Act) is financed by means of an income-dependent contribution, and a nominal premium, per person. It will cost approximately € 1,200 – € 1,450 per year (depending on the insurance company). If you are an employee, your income-dependent contribution (5.4%) will be compensated by your employer. If you are self-employed or unemployed, you will receive no such compensation. Also if you receive an old-age pension or a benefit, you will pay an income-dependent contribution. Whether or not this is compensated, depends on your pension plan / social security institution. Children are covered by basic insurance, free of charge, until they reach the age of 18.
Employee Insurance Schemes
In principle, it is compulsorily for anyone employed in the Netherlands to be insured under Dutch employee insurance schemes (werknemersverzekeringen). The schemes are:
1. WULBZ / WVLBZ / Sickness Benefits Act (ZW)
If you become ill then, under the WULBZ and the WVLBZ, your employer is obligated to continue paying you 70% (that is, up to a maximum of 70% of the Dutch daily wage) of your salary. They must do this for the first 104 weeks of your sickness, provided that you are subject to the Dutch social security system, or you have a contract governed by the Dutch civil code. Some employers will choose to pay you 100% of your last-earned salary.
The ZW only provides a ‘safety net’ for certain categories of employees. These kinds of employees include, for example, those who do not have a single employer (temporary workers, for instance), or employees who have taken out voluntary ZW-insurance.
2. Work and Income According to the Labor Capacity Act (WIA)
The WIA applies to all employees who have been unable to work, due to a disability, for more than 104 weeks. It makes a distinction between long-term disability, temporary complete disability and partial disability for work. The first refers to someone who, even after five five years, will not have made a recovery. The second refers to those who temporarily become 80-100% disabled, and the last to those who are 35-80% disabled. Before you qualify for the WIA-benefit, you and your employer will be assessed, to determine whether you have both put sufficient effort into reintegrating you back into the labor process. In the case of complete and permanent disability, this will not be necessary, and you will have a right to an IVA-benefit (benefit for fully disabled persons), amounting to 75% of your most recent (maximum) daily wage.
3. Disability Insurance Act (WAO)
The WAO only applies to employees who were already receiving the WAO-benefit on January 1, 2006. It will not be discussed here.
4. Unemployment Insurance Act (WW)
The WW insures employees against the financial consequences of unemployment. In order to qualify for the WW-benefit you must:
- Have been employed for a period of at least 26 weeks, over the 36 weeks immediately prior to your becoming unemployed, and
- Have received wages for 208 hours or more of work, in at least four of the five calendar years prior to the year in which you became unemployed
What you receive, and how long you receive it for, will depend on which of the requirements you meet (you can also meet both). As of January 1, 2016, the maximum period during which you will receive the WW-benefit is being shortened incrementally to 24 months. It will reach this length in April, 2019. This can be arranged differently in a collective labor agreement (CAO) and extended to 38 months.
How are Employee Insurance Schemes Financed?
Contributions for the employee insurance schemes are levied on wages and salaries of up to € 54,614 per year (2018), together with wage tax.
‘Double’ Social Insurances
If you are working in the Netherlands , you are, in principle, subject to the Dutch social security legislation. One of the exceptions to this is if you have been posted from another EU or EEA (European Economic Area) member state or Switzerland (based on EC Regulation 883/2004).
If you work here for less than six months then, under certain conditions, you will not be subject to the employee insurance schemes. However, if the income you earn in the Netherlands is subject to wage tax here, and your duties are carried out in the Netherlands, you will be subject to the national Dutch insurance schemes.
EC Regulation 883/2004
If you have been posted to the Netherlands from an EU or an EEA member state, then you can continue to be covered by the social security of that state. This is, however, subject to certain conditions. The main ones are:
- You are covered by the social security schemes of a member state
- You remain in the employment of the company that assigned you
- The anticipated duration of your assignment does not exceed 24 months
- You are not assigned to replace another employee, who has completed their maximum term of assignment
- The Dutch company to which you are temporarily assigned will not subsequently assign you to work for another company
- Your employer usually carries out work on the territory of the assigning state
If you are employed simultaneously in several states, by one single employer, you will be subject to the social security scheme of your country of residence. That is, if you carry out a substantial part of your activities in that country. ‘Substantial’ activities are defined as at least 25% of your working time, remuneration or turnover.
If you work as an employee as well as a self-employed person in several countries at the same time, you will automatically be subject to the social security scheme of the state in which you work as an employee.
If, before you are assigned to the Netherlands, it is clear that the duration of your assignment will exceed 24 months, the two member states concerned will conduct negotiations. They will debate whether the application of the foreign social security legislation should last for a longer period of time. This is usually allowed, if the anticipated duration of the assignment does not exceed five years.
An A1-certificate will be issued to you, to clarify in which country you must make social security contributions. In order to actually receive medical care in the Netherlands you will need a European Health Insurance Card, as well as the certificate. This card is issued by the competent authorities abroad, and enables you to register with a health insurance company in your country of residence. This is of particular importance if you are in need of urgent medical care.
Non-EU / EEA Country
If you are assigned to the Netherlands from a non-EU / EEA country with which the Netherlands has entered into a social security treaty then, under said treaty, you will usually be allowed to remain subject to the legislation of the country from which you have been sent. The conditions for this are generally as follows:
- Before being assigned abroad, you were insured according to the social security legislation of the country from which you are being assigned
- Your employment with the company in the country from which you are assigned is due to continue
The period during which the posting is allowed to continue varies, from 12 months to an unlimited period of time (depending on the treaty). An extension is sometimes possible (again, depending on the treaty).
If these conditions are not satisfied, the general rule is that Dutch social security legislation will apply to you, if your work is carried out in the Netherlands.
Nearly all treaties prevent the simultaneous applicability of the legislation of two countries.
If you are assigned from a country with which the Netherlands has not entered into a social security treaty, it is generally not possible to obtain an exemption from Dutch social insurance legislation. Consequently, you may have to participate in the social security systems of both countries. This means you will be liable to pay double social security contributions and receive double entitlement to benefits.