Health Insurance in Germany: Public vs Private

Travel health insurance, public health insurance, or private health insurance. Germany has many different health insurances. Which health insurance is best for you? 🤔

Table of contents

Introduction

The German healthcare system offers many different types of health insurance: Public health insurance (gesetzliche Krankenversicherung), private health insurance (private Krankenversicherung), and travel health insurance (Reisekrankenversicherung). There are also many misconceptions when it comes to these health insurances in Germany.

In this article, you will find out how much public health insurance & private health insurance are charging you. What kind of coverage you can expect from both types of health insurance. And also which German healthcare system is better for you. As health insurance in Germany is mandatory by law, you have to be a member of either public or private health insurance.

When coming to Germany for just a couple of months (e.g. as a student), travel insurance might be sufficient, but as soon as you decide to stay in Germany for a longer period it is time to get proper public or private health insurance. This systemic decision has far-reaching effects for you that you will find out in this article.

Important: Only employees earning more than 64.350€ gross salary in 2022 have the freedom to choose which health insurance system they want to belong to. Employees earning less than that threshold are forced by the government to be a member of public health insurance. Self-employed people, freelancers, and business owners can always choose their healthcare system freely.

Coverage: Public Health Insurance vs Private Health Insurance

Germany has around 100 different public health insurance companies that have all basically the same kind of coverage and benefits. There are minor differences between different public health insurances but as the minimum coverage is mandated by the German social security law, all public health insurances have 95% of the same coverage.

The big problem with the coverage of public health insurance is that the German government continuously decreases the coverage while increasing the premium at the same time. Over the last years, members of the public health insurance have been forced to pay for their own medication, their glasses, their own dental treatments, etc.

Why would government employees decrease the coverage for their own health insurance? They don’t. Almost all government employees in Germany are a member of private health insurance.

In the private health insurance system, all benefits and coverage are guaranteed from the moment you sign the contract. Therefore, they cannot be decreased. As long as members of the private health insurance fulfill their contractual obligation of paying their health insurance premium, the private health insurance company will fulfill its obligation of guaranteeing your coverage.

Members of the German private health insurance system can also choose the coverage they want themselves. The coverage of private health insurance has to be at least as good as the public health insurance. Beyond that, it can also be a lot better. The higher the benefits, the higher the insurance premium of course.

Generally speaking, the benefits of the German healthcare system can be measured in stars from 1 to 5 like hotels (1 star: Motel & 5 stars: Luxury resort). As the coverage of public health insurance is the minimum coverage by German social security law, it is considered 1 star. Benefits of the private health insurance have to be at least 1 star as well, but can be as high as 5 stars.

If members of the public health insurance system want to upgrade their coverage from the 1-star level, they can get certain additive insurances like dental additive, hospital additive, or ambulant additive to close the gap and come close to the multiple-star level of the private health insurance.

“In the private health insurance, you can choose your own coverage freely as you want it to be.”

Premium: Public Health Insurance vs Private Health Insurance

Members of the public health insurance have to pay 14,6% of their income as a premium. Depending on your public health insurance status (voluntary member or forced member) you will pay 14,6% of your gross salary, dividends or interest that you get, the rental income you generate from real estate, and all other types of income.

On top of that 14,6% every public health insurance company charges an additional contribution that ranges from 0,3% to 1,5% depending on the efficiency of the public health insurance company. The public health insurances are ranked by premium including the additional contribution that they charge here.

On the positive side:

  • The maximum gross salary you have to pay 14,6% public health insurance premium on is 56.250€ in 2022
  • Spouses and children might be insured for free in the public health insurance if they have no income

It is also important to note that members of public health insurance that pay a high premium do not get better coverage or additional benefits. Everyone in the public healthcare sector is receiving the same amount of coverage independent of the amount they contribute with their premium (like taxation you don’t get more benefits because you contribute more).

The premium of private health insurance is always calculated individually and not bound to income. Generally speaking, the higher the coverage, the higher is also the premium of private health insurance. Aside from the coverage, there are also other factors that influence the private health insurance premium:

  • Age: The younger you get into private health insurance, the cheaper the premium will be
  • Health: The healthier you are, the more you will benefit from a lower premium (ie. no risk surcharge)
  • Deductible: If you are willing to pay some of the doctor invoices yourself, you will pay less in premium

That is why people with a high income will benefit the most from being on private health insurance, especially when they are young and healthy. No matter if you are in the public or private healthcare sector, your employer will always pay 50% of your premium as part of the employer’s social security contribution.

Top 3 Private Health Insurance Myths

There are many myths and straight-up lies surrounding the private health insurance system. Many of these “alternative facts” come from friends, neighbors, public health insurance salesmen, and colleagues that are spreading random facts they heard somewhere and believe they are true. Hardly anybody is looking at the German law or objectively true facts.

Myth #1 is of course that private health insurance is cheap when you are young and very expensive when you are old. People tend to believe that your private health insurance premium will be adjusted from year to year because the insured person gets older. This is as wrong as it gets.

It is true that the premium of private health insurance can be very cheap when you are young and healthy, a lot cheaper than the premium of public health insurance when you have a relatively high income (+65.000€ gross salary). So everyone who is planning to work in Germany for just a couple of years and leave again can benefit a lot by switching to the private healthcare sector.

It is not true that private health insurance companies will raise your premium because you get older. Still, both public and private health insurance will become more expensive over time with the rising costs of medical treatment and inflation. A study from the independent research institute IGES indicates the following changes in health insurance premiums:

  • 1995 – 2015: 2,6% rise per year in public health insurance vs 3,3% in private health insurance
  • 2005 – 2015: 3,7% rise per year in public health insurance vs 2,2% in private health insurance

Both healthcare systems in Germany get more expensive over time that is certain. When looking at the demographic change in Germany one can only guess that public health insurance will get a lot more expensive than private health insurance in the future as the German population is getting older and older.

As every member of the private healthcare system is saving at least 10% of his premium for retirement, private health insurance premiums tend to be a lot more stable in old age than the public health insurance premium that is based solely on your income and your financial situation in retirement.

While one can argue that private health insurance myth #1 might be true, the German law clearly indicates that myth #2 is a straight-up lie: Once a member of the private health insurance system, you will always be a member of the private health insurance system.

There are just many rules when it comes to healthcare in Germany because the government wants to prevent people from switching back and forth all the time. So if one does not meet the criteria to choose freely which health insurance system he wants to belong to, there is no way to get out of the public health insurance.

If one wants to leave the private healthcare system again, just talk to your employer that you want to use your legal right for Brückenteilzeit according to §9a TzBfG which means that you want to work temporarily part-time. With part-time you will most likely earn below the threshold and are therefore automatically forced to be a member of the public health insurance again.

The real question is: Why would anybody want to go back to public health insurance after enjoying the benefits of private health insurance? You will fall back from your premium coverage to the 1-star coverage level of the public health insurance and lose all the seniority savings that you built over the time you have been insured in the private health insurance.

Myth #3 of private health insurance is that spouses and kids are especially expensive because they have to be insured individually. It is true that family members with no income are insured in the public healthcare system for free, but as soon as both adults are working, both will pay 14,6% + additional contribution for public health insurance.

So a family in which both adults are working with high income will most likely pay more for public health insurance than for private health insurance. If only one adult is working while being insured in the private health insurance, the other adult will have to stay in public health insurance because he doesn’t meet the requirements to also switch to private health insurance.

As children in Germany are always insured by the highest-earning parent, you cannot choose in which healthcare system your kids should be insured if both parents are members of different health insurance systems. If the highest-earning parent is a member of the private health insurance, kids will also be insured privately. The premium is usually around 100€ – 150€ per month and is being split 50/50 with the company you work for.

Which private health insurance is best for you? Let's find out together.

Conclusion

Health insurance in Germany is mandatory. Because of the strict rules, about 90% of the German population is forced into the public health insurance system. Employees earning +64.350€ gross salary or self-employed people can choose freely which health insurance system they want to belong to (public or private healthe insurance).

The question of the right health insurance in Germany is a complicated question that can only be answered on an individual level. You probably do not want to rely on friends that spread myths, or insurance salesmen that want to sell you either public health insurance or private health insurance (whoever they are associated with).

These are not the right people to discuss your individual health insurance questions with. Feel free to secure a free meeting with us if you would like to discuss your individual health insurance needs & requirements with us here.

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