The German social insurance system plays the central role in the protection against social risks in Germany. Based on the principle of solidarity – i.e. contributions by many that an individual may benefit from in an emergency – it provides financial protection against the risks encountered in life and their consequences, such as sickness, unemployment, old age, occupational accidents, and the need for long-term care.
Social insurance in Germany is divided into five areas:
Information: The broschure Social Security at a Glance 2020 of the Federal Ministry of Labour and Social Affairs provides detailed information on the social security system in Germany.
Employees are automatically compulsorily insured in Germany, as long as they fall below a certain income level (social security contribution ceiling or contribution assessment ceiling- only available in German). Social security is organized by the employer, who calculates the contributions to the pension insurance, health insurance, unemployment insurance, and long-term care insurance contributions on a monthly basis from the gross salary based on the statutory rates, deducts half from the salary as the employee’s share, and pays this to the health insurance company of the insured together with the employer’s share. The health insurance company forwards the respective shares to Deutsche Rentenversicherung and the Federal Employment Agency (unemployment insurance).
Many employees are insured through a statutory health insurance fund. The specific fund may be chosen freely. From a certain income level (69.300 euros gross/year or 5,775 euros gross/month, in 2024 - available in German), employees may switch to a private health insurance provider. Private insurers calculate the monthly contributions based on individual risk.
Self-employed persons usually have to take out their own insurance. For self-employed artists and publicists it is recommended to join the Artists' Social Security Fund (Künstlersozialkasse, KSK). Information is available here.
Health insurance coverage is compulsory in Germany, i.e. self-employed persons must take out private health insurance or – if they meet certain conditions – insure themselves voluntarily through a statutory health insurance provider.
Voluntary insurance through a statutory health insurance provider is possible if, for example, the automatic compulsory insurance coverage ends due to termination of an employment relationship and the employee was insured through the statutory health insurance scheme for a certain duration. Information about this can be found here (additional details- only available in German).
Long-term care insurance also must be taken out through the health insurance provider.
Retirement arrangements can be made privately but it is also possible to join the statutory pension insurance scheme (coverage through the statutory pension insurance scheme is compulsory for certain occupational groups, e.g. for self-employed teachers or artists and publicists insured through the Artists' Social Security Fund). There are plans to make pension insurance mandatory for all self-
employed persons.
Private health insurance (PHI): The monthly contribution is calculated independently of income and based on age, occupation, and health. Employers pay employees a subsidy. The coverage can be
customized. People with pre-existing conditions may find it difficult to find a suitable private health insurance plan and such conditions may lead to higher premiums. Premiums may also increase with age.
Medical services are initially billed to the insured party. He/she receives an invoice which he/she checks, pays, and submits to the PHI for reimbursement. Hospitals usually settle inpatient treatments directly with the PHI.
Statutory health insurance (SHI): Statutory health insurance funds are based on the solidarity principle. The entitlement to benefits is regulated by law and applies equally to all insured persons. Premiums are not dependent on age or pre-existing conditions, but solely on income.
Employers and employees share the basic monthly contributions (14.6 % of the income subject to contributions, in 2023 - available in German). In addition, the insured party pays an additional contribution (in 2024 (only available in German) it amounts to an average of 1.7 percent of the gross income).
Self-employed persons pay the full monthly contribution themselves. Insurance coverage through a statutory health insurance fund may be expensive for self-employed persons, however, as the monthly premiums are usually calculated based on a minimum assessment threshold. This threshold assumes a hypothetical minimum income of 1,132 euros (in 2023 - available in German). The monthly premiums thus amount to 160 euros + additional contribution a month.
The SHI settles any medical services based on the principle of benefits in kind. Medical practices, hospitals, etc. charge the treatment costs directly to the health insurance provider. The insured party does not have to make any advance payments.
It is possible to co-insure family members free of charge under the statutory health insurance scheme. This applies to spouses and registered life partners as well as to children (i.e. children, stepchildren, grandchildren, foster children, adopted children, as well as children of children insured under the family insurance option) – initially until the age of 18.
Some prerequisites must be considered regarding the insurance: The co-insured person
Detailed information from the Federal Ministry of Health can be found here or on the Familien-Portal of the Federal Ministry for Family Affairs, Senior Citizens, Women, and Youth.
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