In Germany, Public health insurance (GKV) premiums are a percentage of your gross income and are split with your employer up to an annual income ceiling. Private health insurance (PKV) premiums are calculated from your age and health at the time you sign up and do not depend on your income. Both systems can raise premiums over time because healthcare costs rise, by an average of about 3% per year. In retirement, the state contributes toward the cost in both systems if you have paid into the German pension system for at least 5 years.
How does income affect Public health insurance and Private health insurance premiums in Germany?
Your income determines the price of Public health insurance (GKV), but it does not determine the price of Private health insurance (PKV).
Public health insurance: your premium is a percentage of your gross income. Together with the mandatory nursing care contribution, the total is about 20% of your income before taxes, and it is split evenly between you and your employer.
Public health insurance has an income ceiling, so your premium stops increasing once your gross income passes that threshold.
Private health insurance: your income only determines whether you are eligible to leave Public health insurance and take out Private health insurance. Once your policy has started, your income has no effect on your monthly premium.
Why do Public health insurance and Private health insurance premiums increase over time?
Premiums in both systems can increase when medical treatment becomes more expensive. On average, premiums rise by about 3% per year for both Public health insurance (GKV) and Private health insurance (PKV). The main reasons medical costs rise are:
New treatments and medical technologies become available.
Wages for doctors and medical staff increase.
People live longer and need more care over their lifetime.
Changes in the law expand what insurers are required to cover.
General inflation increases the price of medical goods and services.
How does my age affect the cost of Public health insurance and Private health insurance?
Age is priced differently in each system.
Private health insurance: your premium is calculated from your age and your health at the time you sign up. After your policy starts, getting older or developing a new health condition does not increase your premium.
Public health insurance: your age does not change the income-based part of your premium. Members over the age of 24 who have no children pay an additional charge of about €20 per month, which is part of German family policy.
What happens to my health insurance premium when I retire in Germany?
Both systems reduce what you pay in retirement if you have contributed to the German pension system for at least 5 years, but they calculate the amount differently.
Private health insurance: premiums on a plan with old age savings (Standard, Plus, or Premium) are designed to stay stable when you retire, because part of what you paid during your working years is set aside for later. The state then contributes 7.5% of your pension income toward your premium, and never more than 50% of the premium.
Public health insurance: your contribution is 18.4% of your pension income. Pension income here includes your state pension, rental income, dividends, and other income. The state covers 50% of that contribution.
How much would I pay in retirement with a monthly pension of €3,000?
The following example compares both systems for a monthly pension of €3,000.
Private health insurance: on a plan costing €500 per month, the state pays 7.5% of your pension, which is €225, and you pay the remaining €275.
Public health insurance: 18.4% of €3,000 is €552. The state pays half, so you pay the remaining €276.
Can I lower my Private health insurance premium in retirement?
Yes. You can move to a Private health insurance plan with a lower level of coverage, which lowers your monthly premium. This is in addition to the state contribution of 7.5% of your pension income that you receive if you have paid into the German pension system for at least 5 years.