Health insurance is the second largest deduction on a German payslip after income tax. Under the statutory system, gesetzliche Krankenversicherung, the employee pays around 8.75% of gross pay including the average supplementary rate, with the employer paying a matching share, up to a contribution ceiling of 66,150 euros. Long term care insurance adds a further 1.7%.
Above an annual income threshold, currently in the region of 73,800 euros, employees may opt out and take private cover instead. That option is what makes the German system unusual, and it is the source of a great deal of poor decision making.
The two models
Who benefits from going private
The arithmetic favours private cover in a narrow set of circumstances and disfavours it in most others.
- Young, high earning, single and healthy. A thirty year old on 90,000 euros with no dependants may pay substantially less privately than the capped statutory contribution, with better access.
- Civil servants. Beamte receive a state subsidy covering a large share of medical costs, and private cover for the remainder is markedly cheaper. Private is the standard choice.
- Self-employed people who would otherwise pay the full statutory contribution without an employer share.
- Anyone with a family on one income is usually better off statutory, because the spouse and children are covered at no additional cost. Privately each family member carries a separate premium.
The long term problem
Private premiums are calculated on entry age and rise over time with medical inflation and with age related provisions. A premium that looked cheap at thirty can be uncomfortable at sixty and difficult in retirement, when income has fallen and the statutory alternative is closed.
Insurers are required to build ageing reserves that moderate this, and a basic tariff exists as a legal backstop, but the pattern of rising premiums in later life is well documented. Anyone considering the switch should model the premium at seventy, not at thirty.
The route back is the other half of the problem. Returning to the statutory system requires income to fall below the threshold, or employment status to change, and after the age of fifty five it is effectively closed. This is a one way door for most people who walk through it.
What the choice does to the payslip
Under the statutory system, the contribution is deducted automatically and the employer pays its share alongside. Under private cover, the employer pays a subsidy up to half the premium, capped at what it would have paid statutorily, and the employee pays the rest directly to the insurer.
The result is that a privately insured employee's payslip shows a smaller deduction and a larger separate outgoing, which makes net pay comparisons between the two misleading unless the premium is added back. Most German salary calculators assume statutory cover with an average supplementary rate, including the one on this site, which is the right default and the wrong figure for a privately insured employee.
The supplementary rate
One detail inside the statutory system is worth knowing. The base rate is set nationally, but each Krankenkasse sets its own Zusatzbeitrag, the supplementary contribution. The spread between funds is small in percentage terms and meaningful in euros over a year, and switching funds is straightforward and free.
Very few people ever switch, which is a small and avoidable cost. The funds differ slightly in the additional services they offer as well, and the comparison takes minutes.
The calculator uses statutory health insurance at the average supplementary rate. If you are privately insured, treat the health line as an estimate. Start with the Germany Salary Calculator.