Health insurance for expat employees in Germany

When it comes to health insurance for employed foreigners in Germany, there’s a lot of information to be aware of. If you are living in Germany, you are required by law to be insured either privately or publicly. At a minimum, you need to be insured for benefits surrounding inpatient and outpatient treatment.

Below, we look at your health insurance responsibilities as an employee starting a new employment contract in Germany, the freedom and flexibility available to employees as a privately or publicly insured person in Germany and what supplementary and travel health insurance options are available. We also delve into how the German social insurance system works, long-term nurse care insurance and what happens if an employee finds themselves ill or injured and as a result, incapable of working.

German health insurance: The law and the facts

Health insurance in Germany is a long-standing national legacy established back in the 19th century. Initially set up by Chancellor Bismarck, it was created to protect workers in a bid to prevent social unrest. Employees and workers have been looked after by the country’s social security system ever since and through the years, the scheme has evolved. Today, the German health insurance system also provides protection for civil servants, handicapped individuals, farmers and artists and continues to garner much prestige for its high quality of health coverage.

Since 2009, persons not automatically insured in the statutory health insurance scheme must take out insurance either voluntarily in the statutory health insurance scheme or through a private health insurance company. Foreigners who choose to live in Germany for longer than 90 days are also required by law to have German health insurance.

In Germany, employees enjoy special social security protection which sees employers typically pay half of an employee's monthly health insurance contributions. These contributions can be viewed on all payslips. This is in accordance with the law of parity which runs through the entire social security system in Germany. At the start of a new employment contract, employees have the responsibility of determining which provider they’d like to be insured by. Employees can also choose to be privately or publicly insured provided they meet the necessary salary thresholds.

The German healthcare system as part of the welfare state

Employees are automatically covered by Germany’s five pillars of social insurance which include health insurance, long-term care insurance, pension insurance, unemployment insurance and accident insurance. This is a statutory (or public) scheme and allows for the provision of comprehensive protection. The healthcare system operates within the mentioned principle of parity alongside the ‘principle of solidarity’ which means that all insured persons will receive equal benefits surrounding entitlements such as paid maternity leave, sick pay and occupational accident cover, amongst many others. The system also ensures every insured person makes a compulsory contribution to financing social insurance depending on their financial ability.

Employees are unable to opt out of contributing to the statutory social insurance system neither by arrangement nor by contract. The only exception is with individuals who work mini-jobs or are in short-term employment. Employees who earn above the salary threshold of currently €62,550 (2020) may also choose to be privately insured, but only in the area of health insurance. Within the pension scheme for instance, they remain mandatorily insured in the public scheme regardless of how much they earn. For those employees who earn above the threshold but wish to remain in the statutory health insurance scheme, they do so voluntarily.

Not having health insurance will cause complications with payroll and the onboarding process.

The dual health insurance system in Germany

The duality of the German health insurance system refers to the co-existence of both private and statutory health insurance and is something unique to Germany which is not practiced by other European countries.

The notion of private health insurance is also the centre of heated debate. Some with traditional views believe that opting out of the statutory health scheme in favour of private health insurance is disloyal to the ‘principle of solidarity’. On the other hand, proponents of private medical insurance advocate that it’s availability is an important characteristic of reinforcing a liberal society. Indeed, there has also been much contentious debate surrounding the idea that without the support and financial boost of the private healthcare system, the statutory system and therefore the entire German healthcare ecosystem would not be what it is today.

No health insurance, no pay cheque

In Germany, it’s compulsory to have health insurance when starting employment. Not having health insurance will cause complications with payroll and the onboarding process and will mean that they might not receive their first pay cheque.

Each registration for a newly hired employee must be made within two weeks of the start of employment. Therefore, it is vital that employees act swiftly to select their health insurance providers. If they fail to do so, employers will automatically enroll the employee into the statutory fund favoured by the employer and this decision normally cannot be altered for 18 months.

Long-term care insurance

Long-term care insurance is a comprehensive German health insurance obligation that was introduced in 1995 for all those insured by public and private insurance. It was established to ensure that anyone in need of long-term nursing care, young or old, could be supported on an extended basis, if needed. Therefore, given such a sustained form of care would add a considerable burden to the healthcare system, this pillar of the German social insurance system was developed.

To keep administrative costs low, the management of long-term care insurance is taken care of by health insurance companies and is the reason why this type of insurance is always discussed in parallel when entering any new agreements. This means that when an individual switches from public to private medical insurance or switches between providers, their long-term care insurance will always change accordingly too.

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Mirja Link-Lundehn - Co-Founder of KLforExpats Mirja Link-Lundehn – Independent insurance broker

Co-founder of KLforExpats and licensed insurance expert

Incapacity to work

In the unfortunate event that an employee is rendered unable to work due to illness or injury, the individual is entitled to the continued payment of wages. This type of protection is a fundamental part of workers' rights in Germany and is regulated by the Continued Remuneration Act (EntgFG). It means that all workers, subject to social insurance contributions, will continue to be financially supported by their employer in the event that they are no longer able to work.

Generally, when an employee is incapacitated, an employer will pay up to six weeks sick leave. From that point on, the employer will stop paying wages and the insurer will step in, paying the insured individual for up to 78 weeks of sickness benefits as part of their health insurance provided it is for the same illness within a period of three years.

Why you may need daily sickness allowance insurance, you can read in the linked article in our expert corner.

Permeability of the health insurance system

One of the great advantages of the German health insurance scheme is the freedom and flexibility it offers. Whilst there are some circumstances that are harder to circumvent than others such as the difficulty in joining the public health scheme for those who have initially opted to be privately insured, there are always exceptions to the rules. These exceptions are based on an individual's unique situation and their right to be protected in the eyes of the state.

For example, a child who enjoys public health insurance without contribution as part of their parent’s plan may one day earn above the salary threshold and choose to opt for private health insurance. If that same individual then finds themselves unemployed, and therefore receives unemployment compensation (ALG I) from the agency of labour, they are then mandatorily insured within the public scheme again. Furthermore, if this person then became a freelancer or found themselves again employed with an income above the salary threshold, they again would have the choice to be covered by a private medical insurance provider. This is the beauty of the German health insurance system- there are restrictions to an extent but the liberties offered are far reaching and are often in keeping with an individual’s needs.

Supplementary private Health insurance

The majority of the population in Germany has statutory health insurance. Whilst these individuals enjoy solid care given the country’s high standard in healthcare, some may wish to add additional private coverage to counteract the limitations of the public German health care system. This is called supplementary private health insurance which allows for the provision of extra benefits. The limitation to supplementary private medical insurance is that this is not subsidized for the employer.

However, it is often favoured by employees as it includes such benefits as additional outpatient and inpatient care options, extensive dental treatment surrounding dentures and high quality fillings, the flexibility to be treated by alternative practitioners, coverage for glasses and contact lenses and preventative medical treatments.

Overview of benefits and weak points of public health insurance in Germany.

22 fundamental facts employees should know about health insurance in Germany

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Travel health insurance

There are a different set of conditions that apply to your German health insurance when travelling and therefore, many opt to add additional travel health insurance, as a form of supplementary health insurance, to their existing health insurance package.

Given that supplementary travel health insurance can cost as little as €10 per year for single persons and up to €25 a year for couples and families, and is also not included as a deductible, many see this as a favourable option regardless of whether they are enrolled in the statutory healthcare system or insured privately. This is especially because medical costs are settled without co-pay or a need for a general deductible. Therefore, to be on the safe side, it is always recommended that individuals double check with their provider how travel health insurance can be included as supplementary health insurance.

FAQ

How does the German Health Care System look like in general?

Germany is well known for having one of the best health care systems in the world, providing its residents with comprehensive health insurance coverage. Approximately 85% of the population are mandatory or voluntary members of the statutory health insurance, whereas the rest have chosen private health insurance plans. What keeps up quality is, luckily, that both systems are in a way competing with each other.

I am only a short-term visitor in German - Do I need comprehensive health insurance?

When you are a temporary visitor here in Germany you are allowed to take out limited international travel health insurance as long as it fulfills the specific requirements of the Schengen Agreement.

Who can opt for a private health insurance plan?

Generally everybody who ist not a mandatory member of the statutory health insurance can switch to private. This is: Self-employed people, freelancers and public servants. Employees, too, may switch to private when they earn more than the so called social ceiling which is 62.550 € gross at the moment (2020). The social ceiling is slightly lifted by law every year.

How do private health insurers calculate the contributions?

In contrast to the statutory health insurance system, where the insurance premiums are calculated according to the income of the insured persons, private health insurance providers calculate their premiums according to the insured person’s risk at the time of taking out the policy. This depends on several factors, in particular the starting age and the individual health status. In addition, the agreed scope of benefits; for example, by agreeing on a yearly deductible (own share) you can reduce the monthly price. And since 2013 gender no longer has any influence on the calculation of the contribution amount.

Learn more.

What do I have to consider as a self-employed person?

As a self-employed person, you pay your complete contribution out of your own pocket. Regardless if you are a member of the statutory health insurance scheme or if you are privately insured. You do not receive any subsidies. With a private health insurance plan you can arrange your individual coverage according to your requirements and wishes and also influence the premium amount.
Since self-employed people often no longer have an income in the event of illness, daily sickness benefit insurance is particularly important for them. With a daily allowance, which can be agreed as of the 4th day of illness, you can secure your livelihood even in the event of loss of earnings.

Do I have to take out health insurance in Germany?

Yes, Health Insurance is mandatory in Germany. Every resident is bound by law to be insured by a German provider for at least hospital and out-patient medical treatment. Listen ladies! This must also include coverage for pregnancy.

I am an employee earning less than 62.550 Euro gross per year. Can I opt for a private plan?

You are compulsorily insured in the statutory health insurance if you are earning less than the so called social ceiling of €62.750 € gross per year (2020). This threshold is slightly lifted by law every year.

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Are there people who can not enter the private health insurance system?

Bankrupt people or applicants with chronic deseases might have problems to apply for private health coverage.
And employees who earn less than 62.550 € gross/year cannot switch to private, because they are mandatorily insured in the statutory health scheme. But the good news for those people is: You may take out supplementary private health insurance on top to improve benefits.

Why do I need a daily sick-pay (Krankentagegeld)?

Your employer will continue to pay you wages if you fall ill as an employee, but usually only for 42 days. As a privately insured person, you should take out private daily sickness benefit insurance in order to financially secure a long-term illness.

If you are self-employed, you can also agree on an earlier date for payment of the daily sickness benefit. This can be of existential importance, as income is often missing at the beginning of the illness.

It is up to you how much daily sickness benefit you wish to insure. However, it may not be higher than your net income from your professional activity. Your average earnings over the last 12 months are taken into account. You should therefore always report a permanent reduction in your income to your daily sickness benefit insurance.

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