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Does private health insurance get unaffordable as you get older?
Does private health insurance get unaffordable as you get older?
Christina Weber avatar
Written by Christina Weber
Updated over 6 months ago

There are plenty of rumors about health insurance prices on the internet. Let's tackle the most frequent myths and the true reasons for price increases!

Myth 1: Providers increase their prices as they see fit

In fact, they can only change the price if the medical bills are higher than expected!

Insurance providers make predictions about how many bills their community will submit. Then, they use your payments to create savings, so that they can cover all future bills.

Sometimes, the bills are more expensive than expected. If they exceed the expectations by 10%, the premiums are adapted to ensure everyone's medical bills can be covered. This process is subject to strict laws, and the monitoring of independent fiduciaries.

Here is why medical bills are higher than expected:

  • New treatments are available, and your coverage is improved

  • Treatments get more expensive (because of inflation, or wage increases of doctors)

  • Policyholders use their insurance a lot more than expected

  • The life expectancy increases, and the insurance needs to cover more seniors in need of medical care

  • The law is changed, so that the insurance must cover more than before

Myth 2: Public health insurance is less expensive long-term

This is not only wrong but the other way around: public health insurance prices have increased more drastically! A long-term study has shown that public health insurance gets 3.2% more expensive per year, whereas it's 2.8% for private health insurance.

Myth 3: Private health insurance gets unaffordable in retirement

Two factors ensure that your insurance remains affordable in pension.

1. Old age savings

As you get older, you need more medical assistance. This results in higher medical costs. Instead of increasing your premium every year, most insurances use a clever mechanism to avoid drastic price changes.

Everyone pays a bit more than what is needed to cover their medical costs when they are young. This creates a money reserve called old age savings. These savings are later used to cover the costs of the additional medical care.

If you leave Germany temporarily, you can keep the savings accumulated so far by pausing your private health insurance contract.

If you leave Germany indefinitely, you will not be able to withdraw the old-age savings.

Similarly, if you switch back to public health insurance (if your income falls below the threshold, or you lose your job and receive unemployment benefits), the old age savings will be lost.

2. Government aids in retirement

You receive financial aid to cover your health insurance on top of your pension payment, if you have paid into the pension insurance for more than 5 years. Every employee pays into the pension insurance by default, but freelancers have to actively apply for a voluntary membership.

Let's compare public and private health insurance costs in retirement!

The rule is that you stick to the insurance you had prior to your retirement.

Private health

Public health

Cost of Insurance

The cost remains the same as before your retirement.

The cost equals 18.4% of your pension income.

Government aid

9.2% of your pension payment. The aid is capped at 50% of your insurance cost.

9.2% of your pension payment.

Example for private health insurance

You get a monthly pension of €3000. On top, the state pays out 9.2% of your pension for your health insurance. This amounts to €276.

You signed up for our standard health insurance plan at €500 a month. Since the aid is capped at 50%, you'll receive €250. You end up paying €250 a month.

Example for public health insurance

You get a monthly pension payment of €3000. Your insurance premium equals 18.4% of that, or €552. The state pays half of that, so you end up paying €276 per month for your insurance.

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