Daily sickness allowance insurance

What is daily sickness allowance insurance?

Daily sickness allowance insurance (Krankentaggeldversicherung) pays you a daily allowance if you are fully or partly unable to work because of illness. It replaces income, not treatment costs. This makes it fundamentally different from basic health insurance: your health insurer pays for the doctor, hospital and medicines, but never for your loss of earnings.

In Switzerland there is no compulsory replacement income for illness, unlike for accidents, where the Accident Insurance Act (UVG) prescribes a daily allowance of 80% of the insured salary. In the case of illness, the employer’s statutory continued payment of salary under the Code of Obligations (CO) applies first. It is limited in time: three weeks in the first year of employment, then a “reasonably longer period” depending on how long you have been employed. That is not enough for a longer illness. This is where daily sickness allowance insurance comes in.

It exists in two legal forms:

• Under the KVG: the voluntary daily allowance insurance of social health insurance under the Federal Health Insurance Act (KVG). The law sets minimum standards, such as a benefit period of at least 720 days within 900 days, limits on reservations and a right of transfer.
• Under the ICA: a private-law contract with a health insurer or an insurance company under the Insurance Contract Act (ICA; in German VVG). Content, duration and benefits are set by the terms and conditions. In practice, many employers take out their collective insurance under the ICA.

Daily sickness allowance insurance is usually taken out as collective insurance: the employer insures all employees together. Self-employed people and people without collective cover can take out individual insurance.

How it works

When the daily allowance is paid

You need an inability to work confirmed by a doctor. In KVG daily allowance insurance, entitlement arises as soon as you are at least 50% unable to work and, unless agreed otherwise, on the third day after falling ill. The start can be deferred in return for a lower premium. This deferral period is also called the waiting period. During the waiting period, the employer usually continues to pay your salary.

In ICA contracts, the terms and conditions set the degree of inability to work required, the day from which the allowance is paid and for how long.

How much and for how long

The KVG does not prescribe a percentage: the insurer and the policyholder agree on the insured daily allowance. If you are partly unable to work, the daily allowance is reduced accordingly. In KVG daily allowance insurance, it must be paid for one or more illnesses for at least 720 days within 900 days. Cover can be limited to illness and maternity.

What the employer gains

Under Art. 324a CO, the employer must pay your salary for a limited period when you are ill. By written agreement, a standard employment contract or a collective labour agreement, the employer may depart from this if the solution is at least equivalent for you. A daily sickness allowance insurance with a longer benefit period is such a solution: it often replaces slightly less than the full salary, but for much longer.

Legal basis

Voluntary daily allowance insurance is part of social health insurance (Art. 1a para. 1 KVG) and is governed by Art. 67–77 KVG. Under Art. 67 para. 1 KVG, anyone who lives or works in Switzerland and is between the ages of 15 and 65 can take it out; para. 3 permits collective insurance by employers and associations. Art. 69 KVG allows reservations for existing illnesses, which lapse after five years at the latest. Art. 70 KVG protects you from new reservations when you change insurer because you start or leave a job, and Art. 71 KVG gives you the right to transfer to individual insurance when you leave collective insurance.

Benefits are governed by Art. 72 KVG: a daily allowance from at least 50% inability to work (para. 2), from the third day unless agreed otherwise, and for at least 720 days within 900 days (para. 3). Art. 73 KVG governs coordination with unemployment insurance, and Art. 76 KVG governs premiums: the same premium for the same benefit, a reduction for a waiting period, and possible gradation by age of entry and region. The term “inability to work” is defined in Art. 6 of the Federal Act on the General Part of Social Insurance Law (ATSG).

ICA contracts are subject to the Insurance Contract Act and the terms of the contract. Under Art. 35a para. 4 ICA, both parties may terminate collective daily allowance insurance by ordinary notice. The employer’s continued payment of salary is governed by Art. 324a and Art. 324b CO.

Example: four months of illness

Marc, 45, has worked for the same company for six years and earns CHF 7,000 a month, paid 13 times a year. Because of an illness, he is fully unable to work for 120 days. His employer has taken out collective insurance. The contract values are assumed for this example: 80% of salary, a waiting period of 30 days during which the employer pays the full salary.

Without daily sickness allowance insurance, things would look different: the employer would only have to pay Marc’s salary for a “reasonably longer period”. The law does not set this in weeks; it depends on the length of employment and the circumstances. With four months of illness, Marc risks being without salary for part of the time.

Situation	Who pays	For how long
No daily allowance insurance, 1st year of employment	Employer, 100%	3 weeks (Art. 324a CO)
No daily allowance insurance, later	Employer, 100%	reasonably longer, depending on length of employment
KVG daily allowance insurance	Insurer, agreed daily allowance	at least 720 days within 900 days
ICA daily allowance insurance	Insurer, as per contract	as per contract

What this means for you

1. Check your employment contract. It states whether daily sickness allowance insurance exists, how much it pays, from when and for how long. Your payslip shows the premium deduction.
2. Report illness early. Hand in your medical certificate in time. Many contracts require notification within a set deadline.
3. Use your right of transfer. If you leave your job, become unemployed or self-employed, you can switch to individual insurance without a new health check. Under the KVG, you have three months from notification. More on this under right of transfer.
4. If you are self-employed, make your own provision. Without an employer, nobody continues to pay your salary. Compare the daily allowance, waiting period and premium. Many health insurers offer daily allowance insurance; their profiles are under health insurers.
5. Adjust if you become unemployed. Under the KVG, unemployed people are entitled to switch their insurance to benefits starting on the 31st day, without a new health check.

Treatment costs continue to be covered by basic health insurance. You can compare your premium for it in the premium calculator. If you need help choosing individual insurance, you can request advice.

Common mistakes

• Believing the health insurer pays for lost earnings. Basic health insurance only pays for treatment. Replacement income comes only from your employer or daily allowance insurance.
• Missing the right of transfer. If you let the deadline pass after your job ends, you have to take out new insurance, with health questions and possible reservations.
• Working without cover as a self-employed person. Without a daily allowance, a longer illness can quickly threaten your livelihood.
• Underestimating the waiting period. A long waiting period lowers the premium but means many days without a daily allowance.
• Mixing up accident and illness. For accidents, UVG insurance pays the daily allowance; for illness, daily sickness allowance insurance does.