The central principle of the statutory health insurance system in Germany is the solidarity principle: all members pay into the system depending on their capacity (income), from which the same uniform benefits are made available even to poorer or destitute members. All insured persons receive the same comprehensive care. Age, gender or disease risk play no role in the contribution calculation.
Statutory health insurance (gesetzliche Krankenversicherung - GKV) is the central pillar of the German health system and the oldest branch of social security.
It was introduced in 1883. From this point on, industrial workers and employees in craft and commercial enterprises were subject to public health insurance. They contributed two thirds, their employer one third of the health insurance contribution. Germany is thus the first country to introduce social insurance at a national level.
Since then, the statutory health insurance has been expanded into a comprehensive social security system and adapted to the challenges of its time. Today, around 90 percent of the German population are insured in a statutory health insurance fund. Around 16 million people are co-insured as family members. For them no contributions have to be paid. They have the same entitlement to benefits as the contributing members. The supporting principle of the GKV is still the solidarity adjustment: between the healthy and the sick, between well-earning and less well-earning, between young and old, between singles and families.
All employees whose monthly gross income is below the compulsory insurance limit (annual income limit) and above the marginal income threshold (in 2018: 450 Euro / month) are mandatory members of the public health insurance. This means that they can not choose between statutory and private health insurance. The compulsory insurance limit in 2019 is 60,750 EUR per year. Employees must earn at least EUR 5,062.50 per month in 2019 for their entry into private health insurance.
Self-employed and freelancers as well as civil servants and students can take out voluntary insurance. They therefore have the choice between statutory and private health insurance, but have to opt for one form of health insurance.
The contributions are based on a percentage of the income or in other terms the salary of the employee who is compulsorily insured. Voluntary members also pay contributions from other income, for example, from capital income or income from renting and leasing. In the case of both compulsorily insured and voluntary members, income is only taken into account in total up to the income threshold of 4,537.50 euros per month or 54,450 euros per year (as of 2019).
Reduced and general contribution rate
In the statuory health insurance, a distinction is made between the general and the reduced contribution rate. The general contribution rate applies to compulsorily insured and voluntarily insured persons who are entitled to sickness benefit. The statutory general contribution rate is 14.6 percent of the contributory income. The reduced contribution rate is 14.0% of the contributory income. It applies to members who are not eligible for sickness benefit. Employees and empoyers share the contribution rates half and half. While the contributions in the statutory health insurance are based on the employee's gross income, they are calculated individually in private health insurance. The insurer includes personal factors such as the age, occupation and health of the insured person.
In addition to the contributions determined according to the general or reduced contribution rate, health insurance funds may charge an additional contribution from their members. These additional contributions can vary from health insurance to health insurance. This causes competition among the health insurance companies, because for the insurance takers the amount of the contribution rate will play a role in the choice of their health insurance. At the moment there are about 110 public health insurance companies in Germany, which differ significantly in terms of price and services.
How to make the best choice between public and private health insurance?
For the statutory health insurance, high-earners pay maximum contributions for basic services, whereas in private health insurance they often receive better-quality insurance coverage. In addition to the contribution calculation, this is also due to the subsidy paid by the employer to privately insured employees which is also 50 percent of the health insurance costs. However, the sum is capped at the maximum amount a public health insured person would receive. In 2019, the grant will amount to a maximum of around EUR 352 per month.
In private health insurance, employees leave the unitary treatments of the statutory health insurance behind. You can decide individually which health protection you want. The price and the associated services need to be balanced. Private health insurance offers tailor-made solutions for your health protection.
According to different tests you can get very good tariffs already from less than 200 euros a month for private health insurance (sample customer is a 35-year-old employee with a monthly income above the mandatory insurance limit). In comparison, for an employee with a gross income of 3,000 euros a month, the contribution rates for public health insurance vary between 220 euros and 240 euros a month.
Since the contributions of private health insurance are based primarily on age and state of health, a statutory health insurance for older employees or people with already existing health problems is often the better option. Employees with children should also keep in mind they may also have to be privately insured and a separate contribution for the offspring has to be paid. However, if the kids can be insured by the other parent's statutory health insurance, the free family insurance will apply.
In any case the health insurance that will suit your needs best can only be found with the help of an insurance expert who can give you an individual offer. Follow this internal link for a comparison of private health insurance rates.