As soon as you decide to adopt the freelance status, you join a branch of Social Security specifically adapted to your status: the Social Security for the self-employed (formerly called RSI, Social Regime for the Self-Employed).
This organization provides very basic social coverage and does not necessarily address all the specific needs of non-salaried workers.
To address the shortcomings of the compulsory scheme, the law of February 11, 1994, known as the “Madelin law,” seeks to provide additional protections for freelancers without weighing on their activities.
To encourage non-salaried workers (TNS) to take out supplementary coverage in addition to their basic compulsory scheme, the Madelin law* allows contributions paid under so-called Madelin contracts to be tax-deductible from taxable profit or income tax, subject to certain conditions.
GSMC, the health mutual designed for self-employed workers (TNS) Partner
Codeur.com has chosen GSMC as its preferred partner to protect freelancers registered on its platform. GSMC offers a plan particularly tailored to freelancers, delivering the best value for money on the market.
Definition of the Madelin law
The Madelin law allows, subject to certain conditions, a tax deduction of contributions paid by the self-employed worker so they can build up a supplementary pension or health coverage.
All contributions paid under these coverages can be deducted from the self-employed worker’s taxable income up to a specified fiscal ceiling.
Who is covered by the Madelin law?
The Madelin law is specifically intended for self-employed workers (TNS). You can benefit from its advantages if you fall into one of the following categories:
- Self-employed persons subject to income tax under the industrial and commercial profits category (BIC)
- Self-employed persons subject to tax on non-commercial profits (BNC)
- Self-employed persons subject to the tax treatment of remunerations under Article 62 of the General Tax Code
- Self-employed persons affiliated with the compulsory sickness and retirement scheme for non-agricultural self-employed workers, such as:
- Tradespeople, shopkeepers, or industrialists
- Self-employed professionals: doctors, medical auxiliaries, lawyers, architects, notaries, bailiffs…
- Non-salaried managers and managers of partnerships limited by shares
- Unpaid collaborating spouses of self-employed workers
Madelin contracts
There are different types of Madelin contracts, designed to meet the various protection needs of the freelancer.
Health insurance contract
As a freelancer, you are entitled to take out a complementary health insurance.
However, standard mutual insurance plans are often aimed at students and salaried employees and are not suited to your situation. Reimbursement rates and contributions are calculated based on those of Social Security…
The Madelin mutual insurance contract adapts to your situation as a self-employed worker and offers reimbursements aligned with the rates of the Independent Social Security system. Even certain “off-nomenclature” health expenses can be covered by this contract.
Another alternative is to subscribe to a mutual insurance plan specifically designed for self-employed workers. This is the case of GSMC, the mutual insurance historically committed to covering the self-employed.
Retirement contract
The Madelin retirement contract helps the freelancer build up supplementary capital for their later years.
The complementary pension is then paid out as an annuity at the same time as the mandatory pensions.
Provident insurance contract
The Madelin provident contract is intended for self-employed workers who want income protection in case of work stoppage or disability.
This contract also allows the freelancer to protect their family in the event of death.
Unemployment insurance
When you have to liquidate your business, your income stops overnight. This situation is often hard to cope with, especially since mandatory expenses continue (rent, electricity, loan payments, water, internet…). The Madelin law offers unemployment insurance for the self-employed that helps maintain their remuneration for a period defined by the contract in case of liquidation or cessation of activity.
The advantages of the Madelin law for a freelancer
The Madelin law aims to reduce social protection inequalities between employees and entrepreneurs. They can benefit from better reimbursements for routine medical care, and even full coverage for more serious treatments.
In addition, they can build up capital to retire with a more comfortable pension than that provided by the Independent Social Security system.
It should also be understood that a day not worked is a day not paid. Madelin contracts offer daily allowances more generous than those of the Independent Social Security system, helping the freelancer maintain their standard of living even if they must remain bedridden for several weeks.
Conditions for subscribing to a Madelin contract
To benefit from the tax advantages provided by the Madelin Law, you must:
- Join a group insurance contract, set up as an association, with at least 1,000 members who currently or previously carried out self-employed activity
- Be up to date with the contributions due under your mandatory health and pension scheme for self-employed workers (non-agricultural)
- Contributions must be for a regular amount and paid at least once a year
By subscribing to the GSMC mutual insurance, you meet the conditions to benefit from Madelin tax advantages.
Taxation of the Madelin contract
Depending on the type of contracts the freelancer subscribes to, the tax benefits they receive vary.
Deductible amounts take into account the tax regime to which the freelancer is subject (BIC or BNC).
The Madelin contract is deductible from taxable profit: retirement, income protection or complementary health insurance contributions are therefore partly financed by the tax savings achieved.
Warning: you cannot deduct all Madelin contributions. They are capped to prevent abuse, at 3.75% of professional income plus a fixed 7% of the annual social security ceiling.
In 2021, for complementary health insurance, the ceiling is €9,872.64, increased by 3.75% of your declared professional income.
Contributions can be paid by you or by your company.
Madelin law: key takeaways
As soon as you choose to give up salaried employment to go freelance, it is advisable to subscribe to Madelin contracts to protect yourself.
You are not required to take out the largest contracts immediately, but the basic contract helps address gaps and spare you some stressful periods.
You can also subscribe to contracts specifically adapted to independent statuses, for example the protection contract offered by the GSMC mutual insurance.
