Switching to private health insurance in Germany: consider this first
If you already have a firm grasp of the German health insurance system, you might be curious to know if switching to private health insurance in Germany is the right choice for you. It’s not an easy decision despite attractive prospects.
This guide is designed to help you reach a conclusion, based on experience and industry-leading resources, from the point of view of a foreigner in Germany. At the end of this guide, you will know if you should look into private plans at all, and what to do next.
Switching to private health insurance in Germany – TL;DR
This guide covers in details all the parameters you should consider before switching to private health insurance in Germany. Here are the main facts:
- Civil servants, self-employed and students as well as employees above a certain annual income are allowed to take out private health insurance.
- Switching to private insurance in Germany can potentially lead to substantial savings, but there are many cases in which it’s not worth it.
- If you are eligible, several things can significantly increase your insurance premium: bad health condition, family plans, job-related risks, old age, unsteady job situation. Only a minority of people have a situation that make private health insurance a good deal over public plans.
- Build a serious budget forecast to assess if you afford contributions over time, even at an old age (or at least, until you leave Germany for good). Use simulations and talk to professionals.
- Inform yourself before you talk to insurance providers, especially since not all advice is neutral and unbiased. You can read this guide before picking a policy too: Picking the right private health insurance in Germany.
Feel free to ask questions in the comments section as well. I gladly response to them to the best of my ability.Bastien
Who is eligible to private health insurance in Germany
There are legal requirements that regulate who can and who cannot take out private insurance. However, different rules apply depending on the type of occupation.
Employees earning well
If your gross income is above a regulated annual income threshold (“Jahresarbeitsentgeltgrenze“), you can choose between statutory and private health insurance as an employee. This threshold is re-evaluated every year. In 2022, it is 64 350€, corresponding to a monthly gross income of roughly 5 363 euros. This covers monthly payments like vacation pay and bonuses, but not one-time payments like dividends. The limit is set to rise to 66 660€in 2023.
As an employee, you are free to pick private insurance if your salary exceeds this threshold at the end of the calendar year, provided it is also the case for the following year.
If you are self-employed full-time, you can choose between private and public health insurance. Some freelancers who work in the arts or journalism are an exception: they may be required to join the Künstlersozialkasse (KSK), which covers half of your fees. We made a detailed guide about the KSK this way.
You can choose private health insurance at the start of your studies in which you are obligated to stay for the entire duration of your studies. You can return to a statutory health insurance fund if you are employed full-time after graduation. If you become self-employed after studies, you cannot switch to public, even if you don’t earn anything.
As a civil servant, you can pick between private and statutory insurance, but there is special benefit. The public employer covers at least half of the costs, but only for private health insurance. As a result, civil servants typically take out a residual cost insurance policy with a private health insurer (Restkostenversicherung). Private health insurance is worthwhile if you are a permanent civil servant with no major health issues. Your stable income and generous insurance subsidy spares you a lot from the financial costs.
When switching private health insurance in Germany make sense
Access to more complete medical benefits in many places is probably the most compelling justification for private health insurance. However, contracts that truly provide good coverage are rarely available at low prices.
Premiums increase, especially in old age, regardless of how much you earn or receive as a pension. Private health insurance is only a good idea if you are confident that you can afford the premiums in the long run. Switching to private only makes sense if you fulfill all the following criteria:
When you are generally healthy
Unlike mandatory health insurance, every private insurer is free to pick and choose who it covers. Before you can be enrolled, you must undergo a thorough health examination. This is used to identify people whose condition is as healthy as possible. After all, someone with pre-existing conditions is more likely to face greater costs than somebody healthy. As a result, private health insurance may reject prospective clients with pre-existing diseases or impose premium risk fees.
If you want to get private health insurance at a reasonable price, you need to be as healthy as possible. If you have received treatment for a mental condition within the last three years, or if you have an acute or not yet totally cured cancer, you are unlikely to be accepted.
The following illnesses are typically an issue with private providers:
- Physical or mental disabilities
- Back problems
- High blood pressure
- Cardiovascular problems
Even if you get accepted, expect to pay an additional premium when switching to private health insurance in Germany.
When you have steady family plans
If you don’t have a partner or children now and don’t intend to have any in the future, choosing private insurance sounds like a no-brainer. However, if you have a family or intend to start one, you should consider the following:
Private insurance does not include family members in your plan. You must pay extra for each family member. This is not the case with public insurance.
Also: you must continue to pay your insurance contributions while on parental leave. That’s especially “painful” as employees because your employer’s share won’t be paid by them during that time. You need to pay it all.
That is usually a deal breaker for a lot of people but there is a case to be made for some high-earners.
When you enroll early
Private health insurance is becoming increasingly expensive over time. As a result, a portion of your contribution is invested in so-called “old age budget” (“Altersrückstellungen”), which ensure that premiums do not skyrocket in old age. To ensure that it works, a lot of money has to be put away for a long time. This is why signing up young is very important: young insured people benefit from interest and compound interest rates. You cannot accumulate sufficient age reserves if you are only privately covered for a short period of time.
If you switch to private health insurance in Germany later in life, you must set aside a bigger portion of your premium as an age reserve. As a result, the overall contribution is significantly higher.
That’s why brokers usually recommend to switch if you are younger than 40 (preferably before), but avoid it as you get older, unless you have large amounts of money stashed somewhere else.
When you work in a safe job
If you work in a job with a high related health risk you must account for high risk fees, limited contract conditions. That is if the company will even take you on!
When you earn well with disposable assets
You must be able to pay for private health insurance contributions both today and tomorrow. Insurance premiums in retirement do not correspond to decreasing income, you should carefully budget everything before switching to private insurance.
The problem is that is not an easy to thing to do. We established earlier that you should sign-up early life for private to be worth it. When you are 30-35, a lot of people are only in the beginning of their careers. Lives have not yet been planned out. It’s tricky to forecast your financial situation for the next 50 years or so.
Switching to German private health insurance is typically less expensive than than the statutory type for single, high-income employees. You should still save the difference you save rather than spending it: this is because insurance becomes increasingly expensive over the years. According to this study, premiums for employees raised by an average of 3.8 percent each year between 2000 and 2020 (public health insurance rates increased at a similar rate).
Major difference though: on statutory insurance, contributions are based on income, also during retirement. Private health insurance always costs the same whether you have a lot of money or not. If you move to private health insurance, you must account for health costs in your pension plans and budget accordingly.
Ignore the attractive prices you see online: you should reckon with 500 to 600 euros a month to start. If you have a family, the premium for each family member is on top of that.
Self-employed have it the toughest probably: There are only a few options to switch back to statutory health insurance if your business goes badly. If you don’t pay into the statutory pension insurance, you also won’t get a subsidy on your private health insurance contributions in old age.
You can use this calculator to simulate how much you will pay over the years and even compare rate between statutory and private health insurance. Use this with a grain of salt: only a professional can give you an accurate estimate.
Still undecided? Talking to a professional is probably worth it
If you have carefully considered all the parameters above, you are now ready to pick your plan. You can read next how to pick your private health insurance provider in Germany: Picking the right private health insurance in Germany. In general though:
- It’s a good idea to talk to an independent broker or insurance consultant (Berater) instead of a providers directly.
- You can also turn to reputable brokers catering to foreigners in Germany like Feather Insurance. They are not incentivized the same way as the rest of the industry. They will tell you if you should go with public instead.
- Finding neutral and honest advice is fairly hard because a lot of brokers have an incentive to push some policies more than others, due to the commission-based system the industry works on.
- A way to go around this to pay for a consultation. That usually “buys” neutral advice instead of them pushing for a sale at all cost. That will take 2 hours of your time and costs about 350€ euros. It might sound steep but the ROI is definitely worth it if you consider the several thousands of euros you might save over time.
- You can find a certified professional using this portal, but there is no guarantee they will speak English and they are usually a bit old-school/paper based.
- Ottonova is an all-digital, English-speaking private provider that is popular with newcomers and foreigners in Germany.
Alternative strategy: optimizing your public plan
Although benefits in the statutory health insurance are largely defined by a regulated catalogue, there are differences between public health insurance funds. Each of those companies are allowed to charge an additional contribution to members. As a result, there are difference in prices between companies, with various added benefits.
They could offer better cover for psychotherapy, alternative medicine, travel vaccinations, sports programmes, etc. By simply changing your statutory health insurance, you can save some money and get better benefits.
If you want even more, you can sign-up for additional separate policies to get similar benefits as a privately insured person. This could be, for example, supplementary dental insurance or travel insurance.
Private German health insurance – FAQ
Private health insurance in Germany is only available to self-employed people and employees earning over a certain threshold.
It depends. For most people, public is the best option. For the minority, provided their life situation is suitable, going private is worth it. You need a very close look at your financial situation now, and for the next 40 years to make that decision.
It makes sense when your family planning is stable, you earn quite a bit of money and you have enough assets to build a comfortable pension plan.
It is possible to go back to public after being in private, but only under certain conditions. Employees must fall back under the revenue threshold set by law first and be younger than 55 at that time. It is much easier for freelancers when they go back to being an employee. Being unemployed and being insured by partner in the public sector is also a possibility.
I hope this decision guide helped to reach to a conclusion. Feel free to write in the comments how useful it was, and whether you have questions. Please note that only a certified professional can give you precise advice based on your situation on when to switch to private health insurance in Germany.Bastien