Self-Employed to receive Illness Benefit from December 2017

For the first time, the Self-Employed will be entitled to sick pay in the event of illness or injury from the 1st of December 2017. This will benefit some 326,000 Self-Employed people here in Ireland, providing them with the safety net of a State supported income.

The illness benefit or invalidity pension is paid weekly at a rate of €198.50, with the possibility of increases for a dependent adult and dependent children. It’s provided to those who cannot work due to long term illness or disability and is not means tested, but is taxable.

It is expected to benefit the Self-Employed, such as small business owners, farmers, tradespeople, freelancers, contractors and professionals. It is also expected to cost the state somewhere in the region of €23 million in 2018. To plan for this, it is thought that the rate of PRSI which stands at a rate of 4% would have to be increased to cover the cost of extending the benefit. However, the Minister for Social Protection, Regina Doherty, confirmed that the rate will remain at 4%.

The Self-employed who now seem themselves out of work due to illness, will now be able to claim the benefit, provided they have paid the relevant number of PRSI contributions. Minister Regina Doherty said this was in line with the Government’ policy of encouraging Self-Employment and Entrepreneurship, making it pay.

“This measure will give the self-employed access to the safety-net of State income supports if they have a serious illness or injury that prevents them from working. It is based solely on their PRSI contributions, it is not means assessed and whatever savings or assets they have will not affect their payment. Similarly, if their partner is working, that income will not affect the payment of the invalidity pension.”

Self-employed workers pay PRSI at a rate of 4 per cent, typically less than that of employees (4%+ employer’s PRSI @10.75%). To qualify for the payment, applicants will need 260 PRSI paid contributions (Class A, E, H or S) since they started paying social insurance and 48 PRSI paid or credited contributions (Class A, E, H or S) in the last complete contribution year or the second last contribution year before the date of their claim.

Successful applicants for the benefit/pension will also receive a free travel pass, which is not means tested and may also qualify for other benefits, such as the Household Benefits Package, which is means tested.

Right now, the Self-Employed already receive benefits such as maternity and paternity leave and the state pension. Earlier this year, they had also received access to the Treatment Benefit Scheme, which is inclusive of free eye tests, dental examinations and contributions towards the cost of hearing aids. These additional benefits have been provided from October 2017 for both Employees and the Self-Employed. The Self-Employed will also pay on average, €200 less tax in 2018, following an increase in the earned income credit, from €950 to €1150 in October’s budget.

About the author: Kevin Deasy