In Germany, the income threshold for how much you must earn as an employee in order to be eligible for private health insurance increases each year. This is called the compulsory insurance limit and is also referred to as “Versicherungspflichtgrenze” or “Jahresarbeitsentgeltgrenze” (JAEG) in German.
This year, the threshold has increased to €66,600 (gross), up from €64,350 in 2022. It has implications for both publicly and privately insured individuals, if the latest increase now places you under or over the new threshold.
The compulsory insurance limit increase occurs every year on the 1st of January.
For employees, it determines whether you are eligible for private health insurance. It offers the choice to opt for private health insurance or stay voluntarily in the statutory scheme if you find yourself earning above the threshold.
This increase applies only to employees and does not impact the self-employed who are eligible for both private and public health insurance regardless of their income and therefore, already have the freedom of choice.
Employees who receive a salary increase and wish to switch to private health insurance must wait until the end of the current calendar year to transfer.
New job starters or those who switch status to employed do not have to wait
Those who do not wish to switch to private health insurance remain voluntarily enrolled in public health system, rather than mandatorily enrolled.
The income threshold for health insurance is valid throughout Germany.
If you’re a publicly insured employee now earning over €66.600 (gross), valid as of 2023 and your yearly income is above the threshold due to a salary increase or starting a new position, you are now eligible for private health insurance. This means you are no longer a mandatory member of the public scheme and now have the freedom to choose between being publicly or privately insured.
Making the switch to private health insurance can be very advantageous for high earners that are currently publicly insured because monthly private health insurance premiums can work out to be more affordable. This is because when you’re privately insured, your monthly premiums are based on your preferences and the health benefits you’ve chosen to include in your coverage.
Whereas when you’re publicly insured, your premiums are based on your income, which means the more you earn, the higher your premiums.
If the compulsory insurance limit increase affects you, not to worry! We can advise you on what you need to know about the increase and provide guidance on whether private or public health insurance is better suited to your needs.
We can also help you with the transition from public to private health insurance, or vice versa if the new compulsory insurance limit changes your eligibility. Don’t hesitate to get in touch for a free consultation here.
If you are privately insured because you previously met the income threshold but your salary hasn’t increased to meet the new limit, you are no longer eligible for private health insurance. This means that you must be mandatorily enrolled into the statutory or public health insurance system.
This is not something that happens automatically, which means you are responsible for cancelling your private health insurance and registering with a public provider, or working with your broker to help you with the transition. Feel free to get in touch with KLforExpats [link] if you would like support with this!
For example, if Jenny earns currently 64.000 € and is employed as an IT-consultant. She was told by her boss that she would receive a salary increase valid as of January 2023, new yearly gross then € 67.000. Unfortunately, Jenny would only be able to opt for private health insurance from 1st of January 2024.
Other example: John is employed as an engineer earning € 5,000 monthly right now. As of December 2022 he will be promoted and will then be earning € 6,000 monthly. He may opt for private health insurance from 1st of January 2023. But only because the promotion was done in December already.
On the bright side, there are also advantages to earning below the €66,600 threshold and being mandatorily enrolled into the public health scheme. Namely, being able to easily switch from private to public health insurance should your circumstances change and public health insurance becomes better suited to your needs. Without your income dropping below the threshold, it’s otherwise notoriously difficult to do this.
Whilst there are many advantages to being privately insured that can outweigh being publicly insured, private health insurance isn’t always cost-effective if you have a big family and 3 or more dependents. So, if you’re privately insured and have been looking for a way to switch to the public scheme to make your health insurance more economical for your family as a whole, the compulsory insurance limit increase could be your chance if you find yourself earning below the €66,000 threshold.
You see, things are complex. Don’t despair, that’s exactly what we are here for! We help you. One of our clients once said “It’s more like you’re Indiana Jones, helping me outrun the snakes.” I think that´s what it´s all about. Let us be your guide through the German health insruance maze. So do not hesitate to contact us. You can easily use the chat below to ask for quick advice. We are here and ready to help.
Mirja Lundehn – Independent insurance broker
Co-founder of KLforExpats and licensed insurance expert
Individuals who are 55 years or older and have private health insurance will continue to be covered by their private insurance provider mandatorily, regardless of income level and whether it meets the new compulsory insurance limit.
Individuals who have private health insurance and purchased it prior to 2003 have a unique, lower income threshold for the purpose of assessing contributions. The current threshold is €58,050 and will increase slightly in 2023, though the exact amount has not yet been announced.
It's important to not confuse the contributions assessment ceiling, also known as the "Beitragsbemessungsgrenze," with the compulsory insurance limit increase. The contributions assessment ceiling is another threshold that changes and needs to be taken into consideration. In 2022 it was €4,837,50 per month and in 2023 it will be €4,987,50 per month, which equates to €59,850 per year. This number also increases each year along with the private health insurance income threshold, so it can be easy to mix the two up.
The contributions assessment is relevant for calculating premiums in the public insurance scheme. In the statutory health insurance, your monthly contributions are calculated as a percentage of your gross income. Currently, that's 14.6% plus 1.3% additional contribution ("Zusatzbeitrag") and for the obligatory long term nurse care insurance, it's another 3.40% if you have no kids, and 3.05% if you have kids.
For example, if you earn €4,000 gross per month, you pay roughly €760 for your public health insurance and the employer contributes half of it. The contributions assessment ceiling limits this monthly premium for higher earners, meaning that regardless of whether you earn €5,000 or €20,000 per month, you will still pay the same monthly premium.
The contribution is capped at an income of €4,987,50 (for 2023) - which is a monthly premium of €962,58 for high earners without kids. Anyone earning more than that pays the same contribution.
For example, if Tom is employed as a marketer and he earns € 66,000 in total in 2022 being privately insured, he will be forced back into the public scheme on the 1st of January 2023. This is because his gross earnings will not exceed the income theshold of € 66,600 in 2023.
Arushi is employed as a senior consultant earning € 8,000 monthly right now. On the 1st of January 2023 she will switch to a part-time contract to spend more time with her children and will be earning € 5,000 monhtly then. She also will then be forced back into the statutory plan.
Still unsure about what the compulsory insurance limit increase means for you in 2023? Don’t hesitate to get in touch with us at KLforExpats for free, straightforward advice. Navigating the complex world of German health insurance can be complicated and overwhelming so let us guide you in making a confident and well-informed decision about your health insurance options!
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These figures are up to date as of the time this blog post was published on 24 October 2022. The internet is filled with misleading information surrounding this topic, so any blog posts or articles you see published before this date with different figures may be incorrect.
