Rising Additional Contribution for Health Insurance in Germany

The cost of statutory health insurance in Germany is set to increase even more than previously anticipated this year. According to a recent study by the Institute of the German Economy (IW), the average additional contribution will rise to 2.9 percent in 2025. This figure is significantly higher than the forecast of 2.5 percent provided earlier by the Federal Ministry of Health.

This increase translates to an additional burden of approximately 7.6 billion euros for both employees and employers compared to earlier estimates. The IW attributes this considerable rise to legislative requirements that compel health insurance funds to deplete their financial reserves, a measure implemented during the pandemic to prevent rapid increases in contribution rates. With these reserves nearly exhausted, the funds must now raise the additional contributions accordingly.

The financial implications for employers are substantial, with an estimated 3.8 billion euros in additional social contributions anticipated due to the increased rates. Jochen Pimpertz, an author of the IW study, noted that escalating social contributions could stifle private investment, thereby acting as a growth inhibitor for businesses in Germany. The cumulative effect of the increases will push social contributions beyond 42 percent.

In light of these developments, there are calls for stringent expenditure discipline from the incoming government coalition. The IW emphasizes the necessity for decisive action from prospective policymakers in Berlin to ensure that economic growth is not hindered further, particularly regarding infrastructure investments financed by the infrastructure fund.

Meanwhile, a health working group currently negotiating the coalition agreement between the Union and SPD has proposed several measures aimed at stabilizing the finances of the statutory health insurance system. These proposals include the federal government taking over the funding of the Transformation Fund, which is intended to support reforms in hospitals. Additionally, health insurance contributions for recipients of citizen income are proposed to be fully covered by tax revenue. If implemented, these measures could alleviate the financial pressure on health funds by approximately 10 billion euros annually. However, the fate of these proposals within the coalition agreement remains uncertain.