Private health insurance in Germany

When it comes to health insurance in Germany, employees and self-employed individuals should choose wisely. The benefits of private health insurance are attractive, but it is crucial to weigh the advantages against the disadvantages. Employers in Germany are obligated to pay half of the health insurance contributions for their employees, regardless of whether they have private or statutory insurance. However, the retirement subsidy from the pension insurance provider no longer covers half of the payable contributions. Instead, it only covers a small portion.

For self-employed individuals, the burden of paying for their health insurance lies entirely on them, both during their active working life and retirement. Therefore, it may be beneficial for them to stay insured in the statutory health insurance fund, despite the higher contributions initially. Since 2019, the German public health insurance has been more favorable for low-earning self-employed individuals, with lower minimum contributions.

Not everyone can leave the public health insurance system in Germany, and it may not be recommended for those who can. Employees with a monthly income above the compulsory insurance limit of 5,550 Euros gross (66.600 Euros/ year in 2023) are eligible for German private health insurance. German social security income limits are set by law, and the federal government adjusts them annually. Full-time self-employed individuals and civil servants can take out private health insurance regardless of their income.

German public health insurance and private health insurance (PKV) are regulated differently, with significant differences between the two systems. In private health insurance, insured individuals are no longer members of a general social welfare institution, such as German social security, but customers of a private company. Anyone considering switching to private health insurance should be aware of these differences.

Choosing between public and private health insurance in Germany is a significant decision, with long-term implications that require careful consideration of the advantages and disadvantages. One should examine the benefits closely. Advantages of private insurance include higher benefits, such as treatment by a chief physician in a private hospital or accommodation in a single or double room. Additionally, many private health insurance packages offer higher reimbursements for dental prostheses than those provided by statutory health insurers. However, not all benefits are better. For example, many older private insurance contracts may not cover psychotherapy or home health care adequately. When selecting a suitable offer, it is crucial to ensure that all necessary benefits are included in the contract, as it is usually impossible to increase insurance coverage in the event of illness.

Switching health insurers in Germany can be complicated, especially when it comes to pre-existing conditions. These conditions can result in high surcharges or even exclusion from insurance coverage. Additionally, privately insured individuals must navigate significant paperwork, as they are required to pay all medical bills, therapies, and medications themselves and then submit the bills to their insurance company for reimbursement. Moreover, individuals in their mid-forties and older are generally advised against switching insurers since they may face high premium increases at retirement age due to the aging reserves the insurer has saved not being enough to slow down the later increase in premiums.

An Anwartschaftsversicherung (entitlement insurance) can maintain the rights of private health insurance coverage during the period in which claims for benefits against other insurance carriers exist. This insurance guarantees that when benefits are resumed, either illness that occurred in the meantime is included in the insurance coverage (short expectancy), or additional aging provisions have been built up (large expectancy). For instance, police officers and soldiers entitled to a free medical care concept can secure the benefits of the private health insurance taken out early.

Qualifying Insurance for Unemployed Privately Insured Individuals.

For privately insured persons who have become unemployed, the entitlement insurance can also be useful, because in the case of unemployment there is automatically compulsory insurance in the statutory health insurance, provided that the 55th year of age has not yet been reached. If unemployment lasts less than one year, the insured person can revive his or her previous private insurance contract under the old conditions even without entitlement insurance. In addition, persons who have had private health insurance for at least five years can be exempted from compulsory insurance in the statutory health insurance at the beginning of unemployment.

Private health insurance (PKV) premiums in Germany are subject to adjustment, much like public health insurance premiums, due to rising healthcare costs. On average, premium income in both systems has increased by around three percent per year over the past decade. Private insurers also build up reserves to cushion premium adjustments and prevent uncontrollable premium increases in old age.

The higher the deductible, the more affordable private health insurance becomes. You can choose a specific amount of your annual medical costs to pay for yourself. It is crucial to select a deductible amount that you can afford to pay at any time, especially in the event of extensive treatment.

Some private insurers offer premium reimbursement options, where you receive up to three months of premiums if you do not use any services within a year.

When students can no longer cover themselves through family insurance or student health insurance, they have the option of voluntary insurance in the GVK. Students pay the minimum monthly contribution of 160.11 euros, plus additional contribution and nursing care insurance. However, private health insurer costs for special student rates can start at around 90 euros.

Children require their coverage in private health insurance. If one parent is a civil servant, parents can cover their offspring for around 40 euros a month. If one parent is not entitled to benefits, the costs start at about 100 euros additional cost.

As a privately insured pensioner in Germany, you are entitled to a subsidy of 50 percent of private health insurance costs from your pension insurance provider. You must apply for this subsidy, ideally directly with your pension provider. The supplement is capped, and you will receive a maximum of 7.95 percent of your retirement as a contribution subsidy.

Regardless of whether you are required to file an annual income tax return or not, it may be worthwhile to do so. Contributions to private health and nursing care insurance are classified as pension expenses, just like contributions to a personal pension plan. You can claim your insurance contributions, as well as those for your privately insured family members, as extraordinary expenses in your tax return.

Contributions to compulsory long-term care insurance and supplementary nursing care insurance are fully tax-deductible in Germany. However, tax authorities only consider contributions for certain benefits for health insurance. Basic health insurance, which is similar to German public health insurance, is used as an orientation value. Additional benefits like a two-bedroom in a private hospital or treatment by a non-medical practitioner are excluded from tax reductions. Contributions for these additional benefits can be deducted as other pension expenses, but only if the maximum limits have not already been exhausted by essential health and nursing care insurance contributions. The maximum limit for other pension expenses is 1,900 euros for employees and civil servants and 2,800 euros for self-employed persons.

Private health insurance companies in Germany are required to offer basic coverage that cannot reject insured individuals who meet the requirements. Surcharge or exclusion of certain benefits due to health risks are prohibited in the basic coverage, which is comparable to the scope of benefits in the GVK. The contribution for the basic coverage is recalculated annually and cannot exceed the respective maximum GVK contribution. If someone is unable to pay the fees, costs may be halved or subsidised by the primary security or social welfare agency. In Germany, statutory social insurance is the essential institution of social security and is regulated by law and organised by self-governing insurance carriers. Social insurance consists of five branches, including statutory health insurance, long-term care insurance, German pension insurance, unemployment insurance, and statutory accident insurance.

Private health insurance can be expensive for families as there is no free co-insurance for children, spouses, or partners. Each individual needs a separate contract and contributions must be paid, which can cost at least 500 euros per adult and about 150 euros per child per month. As a result, employees and self-employed individuals may want to consider switching to private health insurance if they have family members covered by statutory health insurance without paying premiums.

Private health insurance fees can increase significantly in old age, even if you have less income, so it is essential to save enough money for retirement to pay for health care. Contributions to private health insurance are calculated independently of personal income, unlike in German public health insurance, which uses additional revenue from life insurance or rent to calculate contributions in retirement.

Upon retirement, the agreed private health insurance coverage remains in full force, except for daily sickness allowance insurance, which ends when a retirement pension is drawn. Insured persons who have taken out a premium reduction tariff as a pension provision pay a lower premium from the age agreed in the conditions.

Former civil servants pay lower premiums for their health insurance when they retire because the benefit rate usually increases from 50 to 70 percent upon retirement. The amount of insurance that the individual must finance is reduced to 30 percent of medical costs from the start of retirement, reducing the insurance premium.

State employees are entitled to free medical care during their active period, but they must take out private health insurance at the latest upon retirement. A qualifying insurance policy can be taken out at an early age to ensure an average insurance premium even in the event of illness and despite the higher age when switching to private health insurance.