German health insurance cost: Which plan to take and how to reduce premiums
Many people living in Germany wonder whether there is a way to reduce German health insurance cost and whether private health insurance is worth paying for. In the following, we will show you which insurance plan suits you best and how you can save in German health insurance cost by switching.
Table of contents
Introduction: private vs. public insurance
German health insurance cost is a major issue for many people living in Germany – especially many people from the expat community coming to Germany for the first time. There are many misconceptions about German health insurance costs and insurance in general and even more about private health insurance in particular.
Most people in Germany are forced by the government to be a member of statutory health insurance anyway. In contrast, others have the freedom to decide freely if they want to become a member of the private health insurance system. If you do switch your health insurance, private health insurance might be best, because then you can influence your German health insurance cost (public or private) with different factors.
So if you are living in Germany and wonder which German health insurance system (public or private) is right for you, then this article will help you make the decision that is best for your personal situation based on German health insurance cost (Did public or private increase more?).
The first part of this article will sum up the monthly German health insurance cost of the respective health insurance system and the second part of this article will take a look at all possible deductions (in public and private) that will help you to decrease your monthly Germany health insurance cost again.
How to select between insurances based on health insurance coverage
Important: Please do not select the right German health insurance system based solely on the German health insurance cost. Rather focus on the coverage first and then figure out if you are willing to pay for the benefits that you will be getting. If you simply make this a price decision, you will choose the cheapest private health insurance with the lowest quality that will raise their price a lot going forward.
Unfortunately, not everybody living in Germany can choose freely in which health insurance system they want to be insured as the government enforces clear health insurance rules. Essentially, your German health insurance cost is tied to your salary in the public health insurance (not in the private health insurance).
Everybody earning less than 66.600€ in gross salary is forced by the German government into statutory health insurance (except self-employed people that do not pay into the German social security system). As the average German salary is 40.551€ according to the German public pension (Deutsche Rentenversicherung), the majority of people living in Germany are insured in the public health insurance system anyway.
In Germany, average salary means average healthcare which would be public health insurance. Above-average salary means one can choose freely which health insurance system he or she wants to belong to. So above average salary also means one can have access to above-average healthcare which would be private health insurance. In other words, German health insurance cost and coverage (e.g. dental coverage) depend on whether you are insured publicly or privately.
“Average salary means average healthcare in Germany (public). Above-average salary means you can afford above-average healthcare in the private health insurance system.”
Which (above-average) private health insurance plan is best for you? Let’s find out together.
Health insurance cost in Germany: PUBLIC health insurance
In order to get an objective comparison let us select a regular employee in Germany that is earning exactly the threshold salary of 66.600€ gross salary per year (in 2023). His salary is important because the public German health insurance cost is based on his income. On the other hand, private German health insurance cost is calculated individually and does not factor into the salary.
Formula to calculate YOUR public health insurance cost:
Gross salary (max. 59.850€) * (14,6% + additional contribution)
In 2023, the additional contribution ranges from 0,4% – 2,3% with the average being 1,6%. Find out your additional contribution by googling “Zusatzbeitrag” next to the name of your public health insurance company to find out your personal German health insurance cost.
As private health insurance costs are always calculated on an individual basis (e.g. age, coverage, etc), there is no general formula.
In 2023, people insured in public health insurance have to pay 50% of 788€ every month when being insured with Techniker Krankenkasse. Other public health insurance companies can charge different amounts of German health insurance cost, ranging from 748€ – 843€ monthly. By switching from an expensive public health insurance company to a cheaper public health insurance company you can save 95€ in German health insurance cost every month for basically the same coverage (1 of 5 tricks to increase your net salary in Germany).
On top of public health insurance, you also have to pay public care insurance which costs you another 170€ (50% of that) monthly with TK. When being insured in the public health insurance system with TK you would have to pay 50% of 958€ monthly for German health insurance cost and care insurance. And as German social security is shared 50/50 with the company you work for, your employer is paying 479€ in German health insurance cost every month like you are as well.
958€ monthly in German health insurance cost is 11.496€ per year. So: Does Germany have free healthcare? Many people claim that Germany has free healthcare and that nobody is paying for social security. But German health insurance cost does not seem so free if you have to pay 11.496€ every year for it, does it? 🤔
Health Insurance Cost in Germany: PRIVATE Health Insurance
While public German health insurance cost can be summed up very easily on your payslip, private German health insurance cost can vary a lot based on coverage, deductible, preconditions, health status, and age you get into the private health insurance system. Based on the filters you set there are more than 200 plans available from more than 30 different private health insurance companies, leading to a wide variety in the German health insurance cost.
Please do not make the mistake and assume that the cheapest private health insurance plan is automatically the worst plan and the most expensive plan is automatically the best one. That is not how the private health insurance system in Germany works because there are many factors that influence your German health insurance cost (e.g. deductible or co-payment).
A high deductible will lower your monthly German health insurance cost as you are sharing at least some of your medical costs with your private health insurance company.
Keep in mind though that deductible has to be paid entirely by the insured person and the monthly German health insurance cost will be split 50/50 with your employer. So an employee should choose a low deductible or even a 0€ deductible based on the personal health insurance strategy.
Self-employed people and business owners can choose a higher deductible, as they don’t have an employer that pays 50% of their German health insurance cost.
When selecting a good quality private health insurance with a 0€ deductible and 3 star coverage (public health insurance is 1 star in terms of coverage as it covers only the legal minimum determined by the German Social Code), the monthly German health insurance cost can be around 494€ consisting of the following components (vs. 958€ for public health insurance):
- 386€ for private health insurance (mandatory)
- 38€ for private care insurance (mandatory)
- 38€ for seniority savings that keep your premium in retirement as low as possible (mandatory)
- 32€ for sick leave money (optional) in case you get sick for 6+ weeks (sick, not disabled)
German health insurance cost in the private health insurance will almost always be cheaper than in the public health insurance, especially if you are young and have a high salary. And no: Private health insurance costs will not rise when you get older. The moment you get into the private health insurance, your entry age gets locked. German health insurance costs will rise in both public and private because of inflation and the general rising costs of medical treatment.
Deductions: PUBLIC German health insurance cost
Now that we know the costs of public and private health insurance in Germany can be pretty significant (almost 1.000€/month for public health insurance cost), let’s see what you can do to lower your German health insurance cost. It is important to understand that all methods to lower your health insurance cost will not lower your coverage (which is especially important to us at PerFinEx to have a good coverage).
In our example we are comparing a 1 star coverage public health insurance for 958€/month with a 3 star coverage private health insurance for 494€/month. Now let us see the possibilities both German healthcare systems offer and how we can decrease both private and public German health insurance costs to make healthcare more affordable for you.
The cashback will be a reward that is paid to you by your health insurance company for staying healthy. Very few public health insurance companies pay a cashback and the maximum cashback for public health insurance permitted by the German government is 600€/year.
As of writing this article, only 11 out of +100 public health insurance companies pay a cashback. Reach out to your public health insurance company and see if they pay a cashback to lower your German health insurance cost.
Clarification: 958€/month in public German health insurance cost is only 479€/month in practice as health insurance cost in Germany is paid 50/50 together with your employer. After the maximum cashback allowed by the German government (600€/year or 50€/month), the real premium in the public health insurance system is 429€/month.
To secure your cashback, please ask your public health insurance for “Beitragsrückerstattung” and what you need to do in order to get it. While you get cashback in the private health insurance automatically without doing anything, you actively need to apply for it in the public health insurance.
Deductions: PRIVATE German health insurance cost
While only very few public health insurance companies reward you with a cashback if you stay healthy, almost all private health insurance companies pay a cashback (except the one health insurance company doing a lot of advertising in the expat community that claims to be the only English-speaking health insurance in Germany 😉).
As most people insured privately want to lower their German health insurance cost with cashback, they stay as healthy as possible. That makes a lot of sense for private health insurance companies as they are for-profit organizations. The cashback amount of private health insurance can be very high, as there is no maximum cashback set by the German government for private health insurance companies (find the benefits compared here).
To claim your cashback in the private health insurance system all you need to do is to pay for all medical bills yourself instead of sending them to your private health insurance company.
Some health insurance plans even allow preventive measures like cancer screenings or vaccinations to be reimbursed without affecting your cashback.
Cashback is a great option to lower your private health insurance costs as long as your medical bills are below your cashback amount. If your medical bills are e.g. 200€ and your annual cashback would be 800€, it is better if you pay the medical bills yourself and net 600€ profit.
The highest cashback for German private health insurance companies after just 1 year of not sending any invoices to your private health insurance company was 2,5 monthly premiums as well as a 900€ fixed cashback on top. Other private health insurance plans pay up to 45% of the total annual cost in cashback, but it takes you longer than 1 year to get into the highest cashback level.
Good news for everyone insured in the private health insurance system: Cashback is always paid including the part of the premium that is paid by your employer (2,5 * 494€ = 1.235€ in our example).
In our example your private health insurance premium was 494€ monthly, meaning 247€ have to be paid by you (the other 50% by your employer). After deducting 900€/year as well as 2,5 monthly premiums (=965€/year because care insurance, sick leave money & seniority savings pay no cashback), you are left with 92€/month in real premium.
“Public health insurance can charge up to 958€/month while private can be as cheap as 92€/month with a higher quality coverage.”
German health insurance cost: is public or private health insurance cheaper?
When comparing public health insurance with private health insurance in Germany, you can see that there is a massive discrepancy in terms of coverage and German health insurance cost that work both in the favor of private health insurance: 429€/month real premium for 1-star public health insurance vs. 92€/month real premium for 3-star private health insurance.
If you have the freedom to decide freely in which German healthcare system you want to be insured and want to determine together with us which health insurance company & health insurance plan is best for your personal situation, feel free to reach out to secure a free meeting with us. Together we will make sure that you and your family get the most out of your German health insurance cost and have the best healthcare coverage possible (also read our article about family health insurance in Germany).