Health Insurance in Retirement: Debunking the Myths and Ensuring Financial Security

Discover the truth about health insurance in retirement in Germany. Learn how private health insurance can be affordable and provide stability, while the public health insurance system faces financial challenges. 🤔

Key Takeaways


Are you concerned about the cost of private health insurance in retirement? You’re not alone. Many people believe that private health insurance becomes expensive as they age, while public health insurance appears to be a more affordable option.

However, it’s essential to separate fact from fiction when it comes to health insurance in retirement. In this PerFinEx health insurance blog post, we’ll debunk common myths and provide strategies for securing your financial well-being during retirement.

Financial Situation Of Public & Private Health Insurance

First, let us take a look at the financial situation of each system.

  • Profitability of Private Health Insurance Explained: Contrary to popular belief, private health insurance remains profitable, while the public health insurance system continues to face financial challenges. With the government injecting billions of Euros in taxpayer money to support public health insurance, the system is strained. Public health insurance premiums can exceed 1.000€ per month for voluntary members. In contrast, private health insurance offers a viable alternative with potentially lower costs and greater stability.
  • The Public Health Insurance Continues to Lose Money: The financial struggles of public health insurance persist, with billions of Euros being poured into the system (17 billion euros in 2022). Taxpayer funds supplement the rising costs, yet the system remains in deficit. It is important to acknowledge this reality and explore alternative approaches to ensure adequate coverage and stability in retirement.

Let’s get specific here with some numbers regarding the growing disparity. Private health insurance has accumulated an impressive 320€ billion in seniority savings, indicating its robustness. On the other hand, public health insurance relies on significant tax injections from the government, projected to reach 27€ billion in the next two years (2025). Despite the escalating premiums, which can amount to nearly 1.000€ per month, public health insurance struggles to remain financially sustainable.

Understanding Health Insurance Options:

To make informed decisions about health insurance in retirement, it’s crucial to understand the available options and their implications. Let’s take a closer look at the landscape of health insurance in Germany and uncover the truth.

When it comes to health insurance in retirement, you have three main options:

  1. Forced Membership (Public Health Insurance): As a forced member of the public health insurance system, you contribute 14.6% of your gross salary, along with additional fees which are on average 1.6%, and care insurance (3.4% with kids and 4% without kids). This option is mandatory for individuals who don’t meet the criteria for voluntary membership.

  2. Voluntary Membership (Public Health Insurance): Voluntary members, including those earning above 66.600€ gross salary or self-employed people, have the freedom to choose between public and private health insurance. Opting for private health insurance often offers significant advantages, including premiums tailored to individual needs.

  3. Private Health Insurance: Private health insurance provides flexibility and personalized coverage options. Contrary to popular belief, private health insurance can be more cost-effective, especially when you select a high-quality plan that aligns with your specific requirements.

To determine the best health insurance plan for your specific needs, it's advisable to consult with a financial advisor or insurance professional.

Planning for Retirement with private health insurance

Now, let’s explore how private health insurance becomes even more affordable in retirement, debunking the common misconception about escalating costs during this phase of life.

  • Seniority Savings: One often overlooked advantage of private health insurance plans is the accumulation of seniority savings. These savings grow over time and contribute to reducing premium costs during retirement. For example, suppose an individual pays 266€ per month for their private health insurance plan. Approximately 241€ goes toward health insurance coverage, while 24€ is allocated to seniority savings. These savings serve as a safety net, helping stabilize premiums in retirement. These 10% savings will fall away at age 60, decreasing your premium by 10%.

Moreover, the accumulated seniority savings serve as a safety net, helping stabilize premiums even during retirement. It’s crucial to choose a high-quality private health insurance plan to ensure long-term benefits and avoid potential financial burdens.

Health insurance costs in retirment

  1. Forced Membership:  If you are a forced member of public health insurance in retirement, there is the option to join the public health insurance for retirees. The public pension covers 50% of the health insurance costs, while you are responsible for the remaining percentage, including care insurance (the entire percentage). In total, this program requires paying 7.3% + Ø1.6% of your income.  E.g. if you receive a company pension, you have to pay the whole percentage of it (14.6% + Ø1.6%).

  2. Voluntary Membership: As a voluntary member of the public health insurance scheme, your public pension covers 50% of your health insurance costs, while you have to pay for the remaining percentage yourself. Similar to a forced member. But that is not all. As a voluntary member, you have to pay the full percentage of all other income. This means any income, e.g. dividends from ETFs, passive income from real estate, etc.

  3. Private Health Insurance: After the age of 67, private health insurance premiums continue to decrease as there is no longer any sick leave any more. In addition, the accumulated retirement savings continue to play an important role in maintaining stable premiums throughout retirement. They are used to keep your premiums as stable as possible. In addition, they can also be used to reduce your premium. In addition, your state pension also pays 50% of your premium, as with public health insurance.

Worries about rising health insurance costs in retirement can be alleviated through careful planning and understanding the intricacies of the system. By selecting a high-quality private health insurance plan and leveraging the benefits of seniority savings, you can secure your financial well-being in retirement


By making informed decisions and choosing a reputable private health insurance provider, you can ensure that your health insurance costs in retirement remain manageable. The seniority savings accrued over the years will help offset premium expenses, allowing you to enjoy financial security and peace of mind during your retirement years.

It’s crucial to note that everyone’s situation is unique, and the cost of health insurance in retirement will vary depending on factors such as coverage options, age, and individual circumstances. To determine the best health insurance plan for your specific needs, it’s advisable to consult with a financial advisor or insurance professional.

At PerFinEx, we specialize in personal finance solutions for expats living and working in Germany. Our dedicated team of experts can guide you through the intricacies of health insurance, retirement planning, investments, and more. We understand the challenges expats face, including language barriers and the complexities of the German financial landscape. With our independent brokerage approach, we can help you select the financial products and services that align with your unique circumstances.

2 thoughts on “Health Insurance in Retirement: Difference between Public & Private”

  1. Pingback: German Health Minister Hates Private Health Insurance: A Critical Analysis

  2. Pingback: Public vs. Private Health Insurance for Parents in Germany: A Comprehensive Guide

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