Protecting your retirement and health when you start a business

Quick answer. The self-employed owner (TNS) has weaker social protection than an employee: often lower retirement for an equal income, capped daily allowances with a waiting period, poorly covered disability and death. You fill these gaps in order of risk: first contingency cover (incapacity, disability, death), which protects immediately, then retirement through a retirement plan, finally supplementary health cover. Retirement-plan and contingency contributions are deductible within certain limits (Tax Code art. 154 bis).

When you leave employment to start a business, you often lose sight of a decisive point: the mandatory scheme of the self-employed worker protects you less. Retirement, sick leave, disability, death, the gaps are real and costly if not anticipated. The good news is that they are filled by three simple schemes, provided you rank them correctly rather than postponing everything. This article walks through each risk, the order of priority we recommend, and the deduction limits to know.

The level of protection depends first on the social status: a SASU or SAS president is an assimilated employee under the general scheme, while a majority SARL manager, a sole trader or an EURL manager fall under the self-employed scheme. This structure choice is decided upstream, alongside the arbitrage between sole proprietorship and company and, more broadly, how you pay yourself.

The first thing to understand is that not all owners are in the same boat.

The self-employed worker (majority SARL manager, EURL, sole proprietorship, liberal profession) contributes less but acquires fewer rights: basic and supplementary retirement generally lower for an equivalent income, capped sickness daily allowances subject to a waiting period, limited disability and death cover. The assimilated employee (SASU or SAS president, minority or equal SARL manager) falls under the general scheme: their basic retirement and contingency cover are close to an employee's, but their contributions are markedly higher and they do not contribute to unemployment insurance.

The table below sums up the most structural differences between the two statuses. The point is not to crown a winner, but to spot where each one stays exposed.

Neither status covers everything. Even the assimilated employee, better protected on the base, remains exposed on severe disability and death without complementary cover. The point is therefore not to pick the "right" status to be safe, but to identify the gaps specific to your situation and fill them. This is close to the dividend versus salary arbitrage: the share of income declared as remuneration directly drives the rights acquired, notably for retirement.

The most common reflex is to start with retirement, because it is the most visible tax advantage. We recommend the reverse order, based on the probability and severity of the short-term risk.

1. Contingency cover, first. Sick leave, an accident, a disability can happen tomorrow. The contingency contract covers temporary incapacity (a replacement income when you can no longer work), disability (an annuity or capital) and death (capital paid to relatives). For an owner whose income depends entirely on their ability to work, this is the most urgent protection, and it usually costs far less than a well-funded retirement plan.

2. Retirement, next, through a retirement plan. With the self-employed owner's mandatory retirement often lower, the retirement savings plan is the reference tool to top it up. You pay in, capitalise until retirement, then recover a capital or an annuity. The tax benefit is twofold: the payments reduce your taxable income within certain limits during working life, and the capitalisation effect plays all the better the earlier you start.

3. Supplementary health cover, in parallel. Health cover tops up the reimbursement of medical costs beyond the social-security base. It is less "strategic" than the first two, but indispensable day to day, and its cost is easily spread.

Here is the map to keep in front of you. The complementary scheme answers a specific gap, and its deductibility depends on the tax framework.

Deductibility is the central tax argument, but it is capped. Better to know the order of magnitude before you sign.

For retirement-plan payments, the general deduction ceiling is 10% of the year's professional income, retained up to 8 times the annual social-security ceiling (PASS). The 2026 PASS is set at 48,060 euros. The actual calculation is, however, more subtle than a simple proportion: the envelope combines this 10% fraction, a top-up based on the income share between 1 and 8 PASS, and a floor expressed as a percentage of the PASS, and it is often assessed by reference to the previous year's PASS. The exact ceiling, which appears on your tax notice, therefore depends on your income and your situation: that is the figure to aim for, not a theoretical maximum amount. The self-employed worker also benefits from a specific deduction component, calculated from their profit and the PASS, provided by article 154 bis of the General Tax Code.

For contingency and health contributions taken out under article 154 bis (the former Madelin framework), the deduction is capped by a ceiling calculated as a percentage of taxable profit and the PASS, separate from the retirement-plan ceiling. The exact envelope depends on your income level: that is precisely the calculation we run case by case, because a payment beyond the ceiling loses its tax benefit while bringing nothing more. So never reason in terms of "I pay the maximum" without having established the real ceiling for your situation.

In start-up files, social protection is blind spot number one. Founders, absorbed in growth, push these subjects back "until things improve". That is exactly the opposite of what should be done.

Our approach fits in one sentence: contingency cover protects, the retirement plan capitalises, the deduction is only a bonus. A well-funded retirement plan is useless if a six-month sick leave puts you in difficulty before retirement.

Many owners reason backwards, first seeking to reduce tax through a retirement plan while remaining without contingency cover. We always start by securing the replacement income and death cover, then calibrate the retirement plan according to real savings capacity and the deduction ceiling. The tax benefit makes these schemes more attractive, but it must never dictate the order of priorities. This is one of the points we examine in a dirigeant wealth-management approach, to be articulated with company and household taxation.

An owner, a former salaried executive who moved to a sole proprietorship, with a professional income of around 60,000 euros a year, had launched their activity without contingency cover, telling themselves they would deal with it "later". A prolonged sick leave left them with daily allowances far below their usual income, after a waiting period, and insufficient to cover their fixed charges and those of their household.

The analysis showed that a contingency contract taken out from launch, for a cost in the order of a few tens to a hundred euros a month depending on the guarantees chosen, would have allowed them to aim for a replacement income much closer to their standard of living, and that the contributions would have been deductible within the article 154 bis limit. These amounts are only an indicative order of magnitude: the real premium depends on age, activity, the level of guarantee and the waiting period chosen, and is costed quote in hand. On recovery, we set up, in order, a contingency contract sized on their charges, supplementary health cover, then a retirement plan calibrated on their savings capacity. Controlled total annual cost, deduction used within the ceilings, and above all an exposure removed. The right reflex would have cost nothing more had it been taken at the start.

• Identify your social status (self-employed or assimilated employee) and the real level of your base cover, retirement and contingency included.
• Take out contingency cover first, sizing the incapacity guarantee on your monthly fixed charges, not on an abstract percentage.
• Check the waiting periods and exclusions of the contingency contract: they make the difference on the day of the leave.
• Add supplementary health cover suited to your family situation.
• Set up a retirement plan once protection is secured, calibrating payments on your savings capacity and the deduction ceiling.

Once that base is laid, keep a review rhythm so it stays calibrated. Our typical cadence: a check each year at the closing, when the profit and therefore the 154 bis ceiling are known, to adjust retirement-plan and contingency payments without exceeding the deductible envelope; a review at every significant change in income, the arrival of a child, the taking out of a mortgage or a change of status. That is what avoids paying beyond the tax benefit one year and under-contributing another.

• The daily-allowance waiting period. The mandatory self-employed scheme pays allowances after a waiting period and on a capped basis: without contingency cover, the first days of leave are not covered, and the amount stays low.
• Paying into a retirement plan without contingency cover. This is the most frequent mistake: reducing tax for retirement while staying exposed in the short term. Contingency cover comes first.
• Exceeding the deduction ceiling. Beyond the 154 bis ceiling, additional contributions are no longer deductible: an excessive payment costs without saving anything.
• Existing Madelin contracts. The former Madelin contracts are closed to new subscriptions since the PACTE law, replaced by the retirement plan. Contracts in force remain valid and can, under conditions, be transferred to a retirement plan: do not cancel them without comparing.
• Under-sizing death cover with dependants. The mandatory scheme's death capital is low: an owner with a mortgage or children must size this guarantee accordingly.
• Confusing a retirement plan with cash. Sums paid into a retirement plan are locked until retirement, outside the early-release cases set by the regulations (purchase of the main residence, disability, end of unemployment rights, among others): do not put there savings you might need for the business.