Health insurance – security in the event of illness

Whether it’s for a cruciate ligament rupture, appendicitis, a mental health condition or chronic illness – getting medical treatment can be expensive. Treatment costs can quickly exceed a patient’s income and assets. 

The purpose of health insurance is to provide financial security for people in the event of an illness. It is underpinned by the basic principle of risk sharing – to ensure their own financial security in the event of illness, all insured members pay regular contributions (known as premiums). When a person becomes ill, the costs are covered by the collective premiums that have been paid by all members. Health insurance then pays for treatment costs and any necessary medical aids, for example.

All people residing in Germany are required to have health insurance. There are two basic forms of health insurance: 

• Statutory health insurance
• Private health insurance

Almost 90 percent of people in Germany have statutory health insurance – which they are entitled to as employees, pensioners, via family insurance policies or as benefit recipients. Certain prerequisites must be met in order to take out private health insurance.

Statutory health insurance is an important component of social insurance. Health insurance helps to maintain, restore or improve the health of patients. For this purpose, the health insurance funds conclude contracts with health service providers – for example, with the National Association of Statutory Health Insurance Providers (Kassenärztliche Vereinigung), hospitals, pharmaceutical companies and medical stores. 

Statutory health insurance works in accordance with the solidarity principle. In other words, the amount you must contribute to the insurance fund depends solely on your own income. The scope of medical benefits available is the same for all fund members – regardless of the premiums they pay.

People with a chronic illness or disability can also be insured with statutory health insurance without having to pay high premiums.

Statutory health insurance benefits are provided in accordance with the principle of benefits in kind. This means that patients receive medical services without having to pay anything themselves upfront. The medical data card can be used to offer proof of insurance at a GP appointment. The doctor is then paid by the health insurance fund. However, personal contributions known as co-payments have to be made for certain medical services.

Most employees are insured by statutory health insurance through their job. However, this only applies above a certain earnings threshold – people in marginal employment (“minijobs”) are not eligible for statutory health insurance through their job, but rather based on their personal circumstances. For example, they may register via their job center or may be co-insured as part of a family insurance arrangement with their parents or spouses.
 
In addition to employees, people regarded as “vulnerable persons” are also covered by statutory health insurance. These include, for example, students, people with disabilities, people receiving unemployment benefit and pensioners. 

Spouses and children are co-insured free of charge by statutory health insurance funds subject to certain conditions. This is also known as family insurance. However, it is only possible if the co-insured person has a low income or no income at all. 

Information about the income thresholds for family insurance is available on the website of the Association of Substitute Health Insurance Funds (Verband der Ersatzkassen).

Children are normally insured via family insurance up until their eighteenth birthday. However, their family insurance cover ends if they begin paid professional training before then. Family insurance may be continued until the age of 23 if a person has no income or is on a low income. The normal earning thresholds apply to children also. If attending school or university, family insurance can even be continued until the child’s twenty-fifth birthday. 

In the case of a child with a disability that renders them permanently unable to care independently for themselves, cover as part of a family insurance scheme can be extended without an age limit. In this case, however, the disability must pre-date the start of the family insurance arrangement.

More information about statutory health insurance options is provided on the website of the Federal Ministry of Health (Bundesministerium für Gesundheit, BMG).

Are people free to choose any statutory health insurance fund?

People are free to join any of the statutory health insurance funds. It is also possible to switch between statutory health insurance funds – although normally only after a certain commitment period. When a person joins a particular health insurance fund, they commit to remaining with that fund for a minimum of 12 months. 

Anyone who is considering switching health insurance funds should examine in detail which of the funds most closely meets their individual needs. 

The general contribution rate is the same for all statutory health insurance funds. However, there may be significant differences between the funds in terms of supplementary contributions. Each statutory health insurance fund also has its own optional plans, services and additional offerings. These may include, for example, an appointment scheduling service, 24-hour hotlines or bonus programs. 

Our article about switching health insurance funds explains when it makes sense to switch and what formalities and deadlines need to be observed.

The statutory health insurance funds are funded for the most part by the contributions paid by their members. They also receive a State subsidy from tax revenues. 
In 2024, the general rate of contribution for members of a statutory health insurance fund is 14.6 percent of gross income. Half of this amount is contributed by the employee. The other half is paid by the employer. 

While premiums are paid directly to the chosen health insurance fund, they are then sent to a central health fund. This central fund also receives contributions from other social insurance agencies, as well as a State subsidy. Other social insurance agencies include, for example, statutory pension insurance funds and statutory accident insurance funds. The central health fund then makes funds available to the individual health insurance funds.

The amount of funding allocated by the central fund to the individual health insurance funds depends on a number of factors. For example, if one health insurance fund has insured a very large number of old and ill people, this fund will receive more funding for its outgoings. A fund with many young, healthy members, on the other hand, will receive less funding from the central health fund. This allocation mechanism is known as risk structure adjustment.

If a health insurance fund is unable to cover its outgoings with the funding allocated to it from the health fund, it must cover the higher funding requirements with supplementary contributions.

Health insurance fund benefits can be classified as either standard benefits (“Pflichtleistungen”) or add-on benefits (“Zusatzleistungen”). Standard health insurance fund benefits must meet certain criteria – all people with statutory health insurance are entitled to treatment that meets generally accepted medical standards based on the latest knowledge. At the same time, the Fifth Book of the German Social Security Code (SGB V) states that treatments must be provided in an economically efficient manner. In other words, they must not cost more than is necessary.

Within this framework, the Federal Joint Committee (Gemeinsamer Bundesausschuss, G-BA) specifies which medical services are covered by statutory health insurance funds. They include the treatment of health conditions, including any necessary tests, medication, therapeutic services and medical aids.

In addition, the health insurance funds cover the costs of preventive healthcare, screening and aftercare, as well as medical rehabilitation, care measures and sickness benefit. The health insurance funds also pay for medical care during pregnancy and childbirth. The standard benefits are the same across all health insurance funds.

Statutory health insurance funds also offer their members optional plans. These allow members to avail of additional benefits that meet their own individual requirements in certain cases.

Which add-on benefits may be offered by health insurance funds?

There are no differences between the various statutory health insurance funds in terms of standard benefits. However, they can offer various add-on benefits to meet the needs of their members and to distinguish themselves from other health insurance funds. 

These include optional supplementary benefits known as “Satzungsleistungen”. The health insurance fund offers these benefits to all of its members. An example of an optional supplementary benefit is a grant to attend a health course. Some health insurance funds offer their own courses on topics such as nutrition, exercise or addiction. Other funds may cover part of the costs of attending a health course offered by another provider under certain circumstances. 

Health insurance funds may also offer additional optional plans known as “Wahltarife”, which are subject to certain conditions, such as participation in specific treatment programs. In return, members receive a cash bonus, premium repayments or an exemption from paying co-payments.

For example, there are optional plans that repay part of members’ contributions if they have not claimed any medical benefits for a period of one year, excluding claims relating to preventive screening and pediatric care. 

More information about optional plans from the health insurance funds is available on the website of the Federal Ministry of Health (Bundesministerium für Gesundheit, BMG).

Employees can take out private health insurance if their income is above a certain threshold. This threshold is also known as the annual income threshold or mandatory insurance limit. The exact threshold is adjusted annually. Anyone with an income above the threshold can also opt to join a statutory health insurance fund instead.

The following general rules apply:

• People who are self-employed or work on a freelance basis can choose between statutory and private health insurance, regardless of their income. 
• Civil servants can do the same. 

The Federal Ministry of Health provides information on its website about the current annual income threshold.

How does private health insurance work?

The premiums paid for private health insurance are based on: 

• age
• health status
• the benefits that can be claimed

Older people with pre-existing conditions generally pay more than younger, healthier people. Family members are not co-insured free of charge and must pay insurance premiums for themselves. 

In contrast to those with statutory health insurance, people with private insurance generally pay for treatment and medication themselves and subsequently claim these costs back from their insurance provider. In other words, they pay upfront and are reimbursed at a later date. This is known as the reimbursement principle.

Can I switch from private health insurance to statutory health insurance?

It is only possible to switch between private and statutory health insurance under certain circumstances. A switch is possible, for example, if a person’s life circumstances change to such a degree that their compulsory insurance status changes. It may be the case that compulsory statutory health insurance no longer applies to them or, conversely, that they are once again obliged to have statutory health insurance. 

In principle, all people residing in Germany are required to have health insurance. However, according to the Federal Statistical Office, there were around 61,000 people without health insurance living in Germany in 2019. And, it is estimated that the actual figure is much higher due to unreported cases.

A large share of people with no health insurance are self-employed or working on a freelance basis. People in this group are required to organize their own health insurance. This factor, as well as the high insurance premiums that they must pay for themselves, are a common reason why people opt to go without any health insurance if they do not have compulsory statutory health insurance. In addition, people with no fixed address often have no health insurance.
In spite of compulsory health insurance, uninsured individuals are not liable to prosecution. However, they do run the risk of receiving a poorer quality of care and of running up large debts if they become ill.  

How do people without health insurance become insured again?

The general rule is that anyone who previously had statutory health insurance can return to statutory health insurance again. Those who previously had private health insurance must take out private health insurance again. People who have previously had no form of health insurance, either statutory or private, can contact any statutory health insurance fund for advice on how to proceed. 

If a person has been uninsured for a period of time, there will be outstanding premiums to be paid – even if they have never claimed medical benefits during the time in which they were uninsured. These outstanding premiums must be settled when the person becomes insured again in order for them to be able to claim all benefits of health insurance. Special provisions are in place to ensure that people are able to clear debts arising from outstanding premiums. In some cases, for example, premiums only need to be repaid in part. Alternatively, payment in installments may be arranged.

For more information about outstanding health insurance premiums when returning to health insurance, visit the website of the consumer advice centers.

Clearing houses for people without health insurance offer advice on becoming insured again. A list of contact details for clearing houses in Germany is provided by the Office for the Equal Treatment of EU Workers. 

Sources of support on the topic of health insurance are listed below:

Advice is available from consumer advice centers and from the Federal Association of Insurance Advisors (Bundesverband der Versicherungsberater e.V.).

The Federal Ministry of Health (Bundesministerium für Gesundheit, BMG) has published a brochure containing extensive information about the statutory and private health insurance systems, insurance premiums, plans and benefits, and about the digitalization of the healthcare system. 

The Federal Ministry of Health also offers an online guide to the topic of health insurance. 

In addition, a citizens’ hotline is available, providing information about health insurance. You can access the hotline on 030 / 340 60 66 – 01 Mondays through Wednesdays from 8 a.m. to 4 p.m., on Thursdays from 8 a.m. to 6 p.m., and on Fridays from 8 a.m. to 12 noon.