Social Insurance: How It Works and What You Get

Most freelancers in Bulgaria pay their social insurance contributions blindly. They transfer a sum to the National Revenue Agency (bg: НАП) every month without understanding where the numbers come from or what they get in return. The information is scattered across dozens of laws, regulations, and guidelines. Even if you go looking, you end up with outdated advice or incomplete explanations. So most people just rely on their accountant without ever understanding what is behind the numbers.

This guide will give you full clarity. After reading it, you will know exactly how to insure yourself properly, what contributions you owe, and why it is worth viewing your insurance not as an expense, but as an investment in your own security.

What you'll learn

• Who is required to self-insure
• Which contributions are mandatory and which are optional
• How insurable income determines your contributions and future benefits
• How the annual cycle of advance payments and year-end equalization works
• Sample calculations for different income levels
• How your insurance affects your pension and benefits

Let's get started.

What is self-insurance and who is required to self-insure

Self-insurance is a system where you pay your own social insurance contributions. Unlike employees on an employment contract, where the employer covers the larger share of contributions and handles the paperwork, as a self-insured person you calculate, pay, and declare your contributions yourself.

Who qualifies as a self-insured person

According to the Social Security Code (bg: КСО), self-insured persons include:

• Individuals practising a freelance profession - lawyers, notaries, architects, translators, consultants, freelance software developers, and others
• Sole traders - individuals registered as traders
• Registered farmers and tobacco producers
• Owners and partners - in a single-member limited liability company (bg: ЕООД) or a limited liability company (bg: ООД), when they actively work in the company

Simply registering as a freelance professional does not make you a self-insured person. The obligation arises when you file a declaration of commencement of activity with the National Revenue Agency.

Self-insurance versus an employment contract

If you have previously worked as an employee, you will notice significant differences in how insurance works:

At first glance, the percentage for self-insurance looks higher. That is because you cover the employer's share as well. In the following sections, we will break down exactly how these percentages are calculated.

When the obligation to self-insure begins

The obligation to insure yourself begins on the day you start your professional activity. You have a 7-day deadline to file a declaration of commencement of activity with the National Revenue Agency.

Specifically, you file a Declaration for Registration of a Self-Insured Person (Declaration OKd-5). You can do this online through the National Revenue Agency portal using a personal identification code or an electronic signature, or in person at your local National Revenue Agency office. In the declaration, you specify:

1. Your personal details
2. The date you are starting your activity
3. Whether you want coverage for sick leave and maternity

If you forget to add sick leave and maternity coverage when you register, you lose the right to opt in for the entire calendar year. Decide what type of coverage you want before you file the declaration.

Suspending and resuming activity

If you temporarily stop working, you are not required to pay social insurance contributions for that period. You file the same declaration (Declaration OKd-5), this time indicating suspension of activity, again within a 7-day deadline.

When you decide to start again, you file a new declaration to resume activity.

Important: even when your activity is suspended, your health insurance contributions do not stop. If you have no other source of health insurance (for example, an employment contract), you must continue paying them yourself.

Types of social insurance contributions: mandatory and optional

You have three mandatory contributions and one optional. Let's look at each one.

Mandatory contributions

You pay these three contributions every month, no exceptions.

State Social Insurance (bg: ДОО) - Pension Fund

This contribution secures your right to a state pension. The rate depends on your year of birth:

• 14.8% if you were born after 31 December 1959
• 19.8% if you were born before 1 January 1960

Those born after 1959 pay a lower rate here because they also contribute to a second pension pillar (Supplementary Compulsory Pension Insurance, covered next). Those born before 1960 have no second pillar, so their entire pension contribution goes into the state fund.

Supplementary Compulsory Pension Insurance (bg: ДЗПО)

If you were born after 31 December 1959, you contribute 5% to a Universal Pension Fund. This money goes into a private pension fund of your choice and accumulates in a personal account. When you retire, you receive an additional pension from this fund on top of your state pension.

Those born before 1960 do not make this contribution. They receive only a state pension but pay a higher State Social Insurance rate to compensate.

Health Insurance

The Health Insurance (bg: ЗО) rate is 8% for everyone, regardless of year of birth. It gives you access to healthcare services through the National Health Insurance Fund (bg: НЗОК): a general practitioner, specialists, hospital treatment, and partial coverage of medication.

Optional contribution

General Disease & Maternity Fund (bg: ОЗМ)

The only contribution you get to choose is for general disease and maternity. The rate is 3.5% of your insurable income.

What the General Disease & Maternity Fund covers:

• Sick leave - compensation during temporary incapacity (illness, caring for a sick family member)
• Maternity - benefits during pregnancy, childbirth, and childcare up to age 2
• Paternity - 15 days of paid leave upon the birth of a child

Without this contribution, you have no right to sick leave pay, maternity, or paternity benefits. If you fall ill, you simply stop working and receive no compensation.

Summary of all combinations

Notice that the total rate is the same for both groups: 27.8% without the General Disease & Maternity Fund and 31.3% with it. The only difference is how the amount is split between State Social Insurance and Supplementary Compulsory Pension Insurance.

When should you opt in to the General Disease & Maternity Fund? It is worth it if you are planning to have children in the near future, have a chronic condition, or simply want extra security. The additional 3.5% guarantees you an income when you cannot work.

Insurable income: what your contributions are based on

So far we have covered the percentage rates for each fund. The next step is understanding the amount those rates apply to, because that is what determines how much you pay every month.

What is insurable income

Insurable income is the amount used to calculate your social security contributions. Think of it as the "tax base", but for insurance purposes.

For example, if your insurable income is €1,000, all the percentage rates for pension, health and the other funds are calculated on that amount. Higher insurable income means higher contributions, but also a higher future pension and larger sick-leave benefits.

What counts and what does not

Not every type of income counts towards your insurable income. Only income from active work qualifies:

• Income from a freelance profession (consulting, services, fees)
• Income from a craft or trade activity
• Income as a sole trader
• Payments under civil contracts

What does NOT count:

• Rental income from property
• Interest on deposits and savings
• Dividends from company shares
• Certain royalties (under specific conditions)

This distinction matters. If you earn €1,500 from consulting and €500 from rent, you only owe contributions on the €1,500 from consulting.

Minimum and maximum insurable income

The state sets a floor and a ceiling for your insurable income.

Minimum insurable income for 2026: €550.66 (BGN 1,077)

Even if you earn less than this amount, you owe contributions on it. If you only invoiced €400 this month, you still pay contributions on €550.66. That is the mandatory minimum.

Maximum insurable income for 2026: €2,111.64 (BGN 4,130)

This is the ceiling. If you earn €5,000 a month, your contributions are calculated on a maximum of €2,111.64. Anything above that amount does not increase your contributions.

Taxable income, insurable income and tax base

These three terms get mixed up all the time, but they mean different things. The easiest way to understand them is with a concrete example. Say you invoiced €2,000 gross this month.

Taxable income is your gross income minus statutory recognised expenses (25% for most freelance professions). In our example: 2,000 x 75% = €1,500.

Insurable income is the base for calculating your contributions. It is calculated the same way (75% of gross income), but it is capped between the minimum (€550.66) and the maximum (€2,111.64). In our example €1,500 falls within those limits, so insurable income is €1,500. If your taxable income were €400, your insurable income would be raised to the minimum of €550.66. If it were €3,000, it would be capped at €2,111.64.

Tax base is the amount on which income tax (10%) is charged. You get it by subtracting your contributions from your taxable income. In our example: 1,500 − (1,500 x 27.8%) = 1,500 − 417 = €1,083.

Here is the full chain: from €2,000 gross you deduct 25% statutory recognised expenses (−€500) to arrive at taxable income of €1,500. You then charge 27.8% in contributions (−€417) and reach a tax base of €1,083. Finally, you apply 10% income tax on that (−€108).

The higher your insurable income, the higher your future benefits and pension. We will look at exactly how in the section "How insurance affects your future".

Advance contributions and year-end equalization

Freelance income is rarely the same every month, but insurance contributions are due on a regular basis. That is why the system splits the process into two stages: during the year you pay advance insurance contributions on an income amount you choose yourself, and after the year ends you reconcile against your actual earnings.

Advance contributions during the year

You pick an amount between the minimum (€550.66) and the maximum (€2,111.64) insurable income and pay contributions on it every month. You can change this amount each month through Declaration Form 1, but most people choose one figure and stick with it for the entire year.

If you choose €550.66, you pay around €153 per month. If you choose €1,000, it is around €284. The amount stays the same every month, which makes budgeting straightforward.

The income you choose is only provisional. The real reckoning comes after the year ends.

Keep in mind that the insurable income you declare should reflect what you actually earned. Declaration Form 1 is due by the 25th of the following month, so by then you already know your real income. You cannot insure yourself on income you did not actually receive. Think of it like car insurance: you cannot insure a car worth €15,000 for €50,000 and expect a €50,000 payout if something goes wrong. If you overstate your insurable income and use sick leave or maternity benefits during the year, those benefits will be recalculated downward based on your actual income at year-end equalization. You may end up having to return part of what you received.

How to choose your monthly insurable income

• Unpredictable income: If your earnings fluctuate from month to month and you cannot forecast what is coming, choose the minimum of €550.66. You pay less up front and settle the rest at year-end equalization. Set the difference aside each month so the top-up payment does not catch you off guard.
• Steady income: If you have regular clients and a good sense of what you will earn, choose an insurable income that matches your actual monthly earnings after the statutory recognised expenses deduction. This keeps the year-end equalization small or eliminates it entirely.
• High and steady income: If your earnings after statutory recognised expenses consistently exceed the ceiling of €2,111.64, choose the maximum insurable income. Your contributions will be the highest possible, but so will your future pension and benefits.
• Employment contract plus freelancing: If you also have a salaried job, factor in your salary first. It fills the €2,111.64 ceiling before freelance income. Choose an advance insurable income only for the remaining gap. If your salary already reaches the ceiling, you owe no additional contributions on your freelance earnings.

Final insurable income and equalization

Once the year is over, you know your actual earnings. With your annual tax return (due by 30.04 of the following year), you fill in the Statement of Final Insurable Income. In it, you calculate what your real contribution base should have been for the year.

The formula: Final monthly insurable income = annual taxable income (after statutory recognised expenses) ÷ number of active months

You divide by the months during which you were actively working, not necessarily by 12 (Art. 3, para. 3 of НЕВДПОВ). If you started in April, you divide by 9.

Important: If you have not formally suspended your activity with the National Revenue Agency, a month counts as active even if you earned nothing in it. Income is distributed equally across all active months, regardless of when you actually received the money.

Example: Annual taxable income of €18,000, activity during all 12 months → 18,000 ÷ 12 = €1,500 final monthly insurable income.

Because income is distributed equally, the resulting figure is the same for every active month. It is subject to the same floor and ceiling (Art. 6, para. 8 of the Social Security Code):

• Below €550.66 → raised to €550.66
• Above €2,111.64 → capped at €2,111.64

The equalization itself:

Once you know your final insurable income, you calculate your annual contributions on that amount. The National Revenue Agency compares this total with the contributions you already paid in advance:

• You paid less than you owed → you pay the difference by 30.04
• You paid more than you owed → the overpayment is offset against future obligations or refunded

The minimum insurable income as a strategy

Many people choose to pay advance contributions on the minimum of €550.66, even when they earn significantly more. The logic sounds appealing: smaller monthly payments.

If your real monthly income is €1,000, you owe €3,336 for the year (1,000 × 27.8% × 12), regardless of which advance income you chose. The only difference is timing: you either pay a steady €278 per month or €153 per month plus a lump sum of €1,499 at equalization.

If your income is unpredictable, this approach makes sense. Just make sure you set the difference aside for the equalization payment.

Employment contract + freelancing: combined insurable income

If you have both a regular job and freelance work, you will not pay contributions twice on your entire income. Your total insurable income from all sources is capped at €2,111.64.

How insurable income is determined

When you have income from multiple sources, each source counts toward the ceiling in a specific order (Art. 6, para. 11 of the Social Security Code):

1. Salary from an employment contract
2. Remuneration for company management (management and control contract)
3. Income from freelance work

Your salary fills the ceiling first. Freelance income is added on top only until the maximum is reached. If your salary already meets or exceeds €2,111.64, you owe no additional contributions on your freelance earnings.

Practical example

Let's look at a specific scenario. You work under an employment contract on the minimum wage (€620.20 for 2026) and have freelance income of €1,500 gross per month.

Step 1: Insurable income from salary: €620.20

Step 2: Remaining room under the ceiling: 2,111.64 - 620.20 = €1,491.44

Step 3: Freelance income after deducting 25% statutory recognised expenses: 1,500 × 0.75 = €1,125

Step 4: Since €1,125 < €1,491.44, the full freelance income is subject to contributions. Insurable income from freelancing: €1,125

Step 5: Monthly contributions on the freelance portion: 1,125 × 27.8% = €312.75 (without General Disease & Maternity) or 1,125 × 31.3% = €352.13 (with General Disease & Maternity)

How your salary affects freelance contributions

The higher your salary, the fewer additional contributions you owe on the freelance portion. Here is a comparison with the same freelance income of €1,500 gross (€1,125 after statutory recognised expenses):

Advance insurance contributions when combining activities

Even with an employment contract, as a self-insured person you owe advance insurance contributions on a chosen income (minimum €550.66). The only constraint: the sum of your salary and the chosen advance income cannot exceed the ceiling of €2,111.64.

Equalization works the same way: if your actual freelance income exceeds the advance amount you chose, you pay the difference by 30.04.

How to calculate your contributions: real examples

Let's see how everything works with real numbers. All examples use the 2026 rates and a total rate of 27.8% (without General Disease & Maternity). If you opt into General Disease & Maternity, the only difference is the rate: 31.3% instead of 27.8%.

Example 1: Minimum advance income with a large equalization payment

Situation: A freelance graphic designer. Not sure how much income to expect, so they choose the minimum insurable income of €550.66. The year turns out to be a good one: €24,000 in gross revenue.

During the year they pay 550.66 × 27.8% = €153 per month, or €1,837 for the full year.

At equalization they calculate their final income: 24,000 × 75% = €18,000 taxable income ÷ 12 months = €1,500 per month. Total contributions due for the year: 1,500 × 27.8% × 12 = €5,004.

Result: They owe an additional 5,004 − 1,837 = €3,167 by 30 April. That is a significant amount, so it pays to set aside the difference each month.

Example 2: Accurate forecast (no equalization needed)

Situation: A translator with a steady client base. They earn roughly €1,333 gross per month. They choose an insurable income of €1,000, because after the 25% statutory recognised expenses deduction, that matches reality.

During the year they pay 1,000 × 27.8% = €278 per month, or €3,336 for the year.

At equalization they calculate: 16,000 × 75% = 12,000 ÷ 12 = €1,000 per month. Contributions due: 1,000 × 27.8% × 12 = €3,336.

Result: The difference is €0. No additional payment, no refund. The ideal scenario for cash flow management.

Example 3: Overestimated income (refund)

Situation: A consultant expecting a strong year. They choose an insurable income of €1,500, but work turns out slower than planned: €12,000 gross for the year.

During the year they pay 1,500 × 27.8% = €417 per month, or €5,004 for the year.

At equalization they calculate: 12,000 × 75% = 9,000 ÷ 12 = €750 per month (above the minimum of €550.66, so no upward adjustment needed). Contributions due: 750 × 27.8% × 12 = €2,502.

Result: They overpaid 5,004 − 2,502 = €2,502. This amount is offset against future obligations or refunded upon request.

Watch out if you used sick leave or maternity: If you received sick leave or maternity benefits during the year, the lower final income means those benefits get recalculated downward (by 30 June of the following year). You may need to return part of what you received to the National Social Security Institute. With an overstated advance income, this risk is real, so keep it in mind when choosing your amount.

Example 4: Employment contract plus freelancing

Situation: An employee with an insurable income of €1,300 from their job. They also take on freelance projects earning €1,500 gross per month.

Taxable freelance income: 1,500 × 75% = €1,125.

Remaining room under the ceiling: 2,111.64 − 1,300 = €811.64. Even though the taxable freelance income is €1,125, contributions are only due on €811.64, because total insurable income cannot exceed the ceiling.

Additional monthly contributions: 811.64 × 27.8% = €225.64. The remaining €313.36 (1,125 − 811.64) is not subject to social contributions but is still taxed as income.

Comparison of all four scenarios

*Freelance portion only

No matter what advance income you choose, by the end of the year you pay contributions on your actual income. The only difference is cash flow. Choose based on your financial discipline and how predictable your income is.

Deadlines, payments, and declarations

You know how much you owe. Now let's cover when and how to pay.

Every month: by the 25th

By the 25th of the following month, you do two things:

1. Pay your advance insurance contributions
2. Submit Declaration Form 1 - this is where you report your insurable income, the number of days worked, and any days on sick leave or maternity leave

For example, for January 2026 you pay and file by 25.02.2026.

Once a year: by 30 April

Together with your annual tax declaration, you submit Declaration Form 6. In it, you report your final insurable income for the previous year. If there is a difference compared to your advance contributions, you either pay the shortfall or receive a refund within the same deadline.

How to pay

The National Revenue Agency portal (most convenient): log in with your personal identification code (PIC) or qualified electronic signature (QES), enter the amount, and cover all contributions in a single payment. No separate transfers for each fund.

Mobile or online banking: make a separate transfer for each type of contribution (State Social Insurance, Supplementary Compulsory Pension Insurance, health insurance), since each goes to a different account.

Summary

How social insurance affects your future

Every month you pay social insurance contributions, and it is natural to wonder what you get in return. The answer: protection during illness, maternity, and a pension. The amount of each benefit depends on your final insurable income, so it is worth understanding exactly how it is calculated.

Sick leave benefits

Benefits for temporary incapacity (sick leave) are only available if you opted into General Disease & Maternity coverage. Without this additional 3.5% contribution, you have no right to sick leave benefits.

Eligibility requirements:

• At least 6 months of insurable service with General Disease & Maternity contributions (Art. 40, Para. 1 of the Social Security Code). The months do not need to be consecutive.
• A sick leave certificate issued by a doctor.

How the benefit is calculated:

The daily benefit is 80% of your average daily insurable income for the last 18 calendar months before the month you fell ill (Art. 41, Para. 1 of the Social Security Code). The benefit cannot exceed your average daily net income for the same period.

What is specific to self-insured individuals:

• The National Social Security Institute (bg: НОИ) pays the benefit from day one of your sick leave. By comparison, employees on an employment contract have their first 2 working days covered by the employer at 70%, and from the 3rd day onwards the National Social Security Institute pays 80%.
• For the days you are on sick leave, you owe no contributions for State Social Insurance (SSI) or Supplementary Compulsory Pension Insurance (SCPI) (Art. 9, Para. 2, Item 5 of the Social Security Code). The period counts towards your insurance record without contributions. Health insurance remains mandatory: 4.8% on the minimum insurable income (around €26 per month for 2026).
• The benefit is recalculated by 30 June of the following year based on your final insurable income.

Practical example: With a final monthly insurable income of €550.66, the daily benefit is around €20. With an income of €1,300, it reaches around €48 per day. Over 10 working days of sick leave, the difference is around €280.

Maternity benefits

Maternity requires General Disease & Maternity coverage for at least 12 months (Art. 48a of the Social Security Code). The benefit covers 410 calendar days: 45 days before the due date and 365 days after birth.

How it is calculated:

The daily benefit is 90% of your average daily insurable income for the last 24 calendar months before the start of your leave (Art. 49 of the Social Security Code). The base is your final insurable income, not the advance amount.

The difference between the minimum and maximum income over the entire maternity period exceeds €19,000. If you are planning a family, the most important step is to add General Disease & Maternity coverage at least 12 months before your planned pregnancy. The benefit is based on the 24 months before your leave, so the earlier you add coverage, the more full months will factor into the calculation.

After the 410 days: You are entitled to a childcare benefit until the child turns 2. The amount for 2026 is fixed at €460.17 per month, regardless of your insurable income.

Contributions during maternity: For the entire maternity and childcare period (up to the child's 2nd birthday), you owe no contributions for SSI or SCPI (Art. 9, Para. 2, Item 5 of the Social Security Code). The period counts towards your insurance record. Health insurance remains mandatory: 4.8% on the minimum insurable income (around €26 per month for 2026).

Paternity benefits

15 calendar days at birth (Art. 50, Para. 6 of the Social Security Code): The father receives 90% of his average daily insurable income for the last 24 months. This requires a minimum of 6 months of insurable service with General Disease & Maternity coverage.

Transfer of remaining days from the 410: After the child turns 6 months old, the mother can transfer unused days to the father. This requires 12 months of insurable service with General Disease & Maternity coverage.

2 months of leave for a child under 8 (Art. 53g of the Social Security Code): The benefit is fixed at €460.17 per month for 2026. This requires 12 months of insurable service with General Disease & Maternity coverage.

For all types of paternity benefits, the same contribution rules apply: no SSI or SCPI contributions are owed, but the health insurance contribution of 4.8% on the minimum insurable income remains mandatory.

How your pension is calculated

Your pension is determined by a formula with four components (Art. 70 of the Social Security Code):

Pension = National average income x Individual coefficient x Service x 1.35%

National average insurable income is the average insurable income across Bulgaria for the 12 months before retirement. As of January 2026, this figure is around €948. This component is outside your control.

Individual coefficient is the ratio of your insurable income to the national average, calculated across every month from 1 January 2000 to the date of retirement (minimum 36 months). If your income has always been at the national average, your coefficient will be around 1.0. If it has been at the minimum, the coefficient will be significantly lower.

Insurable service is the total number of years during which you paid contributions.

1.35% is the weight for each year of service, set by law (since December 2021).

For pension purposes, the calculation uses your final insurable income (after the annual equalization), not the advance amount.

Example: With 35 years of service and contributions at the minimum level (coefficient ~0.58), the pension is 948 x 0.58 x 35 x 1.35% = ~€260. With the same service length and income at the ceiling (coefficient ~1.35), the pension is 948 x 1.35 x 35 x 1.35% = ~€605.

The difference is more than double. There is also a guaranteed minimum pension (around €322 for the first half of 2026), but relying on it means a significantly lower income in retirement.

Conclusion

You now know which contributions you owe, how to calculate them, when to pay them, and what you get in return.

Key takeaways

• Mandatory contributions: State Social Insurance, Supplementary Compulsory Pension Insurance, and health insurance (27.8%). Optional: General Disease & Maternity (+3.5%)
• Insurable income: minimum €550.66, maximum €2,111.64
• Annual cycle: advance contributions based on a chosen income → equalization based on actual earnings
• Combined income: total insurable income from all sources cannot exceed the ceiling
• Benefits and pension: these depend on your final insurable income, not the advance amount

Checklist

When starting your activity (one-time)

1. Submit Declaration OKd-5 to the National Revenue Agency within 7 days
2. Choose your insurance type: mandatory only, or with General Disease & Maternity

Every month (by the 25th)

1. Determine your insurable income for the month (between €550.66 and €2,111.64)
2. Pay your insurance contributions
3. Submit Declaration Form 1

Once a year (by 30 April)

1. Calculate your final insurable income
2. Submit Declaration Form 6 together with your annual tax return
3. Pay the difference if your final income is higher than your advance income

Next steps

1. Decide whether to include General Disease & Maternity coverage, considering your life stage and plans
2. Choose an advance insurable income that is close to your actual monthly net earnings
3. Set a monthly reminder for the 20th so you never miss the payment deadline on the 25th

Frequently asked questions