Employer subsidy for private health insurance

Switching to private health insurance (PKV) offers many advantages, including more personalized benefits and shorter waiting times. Unfortunately, however, these benefits also come with high costs. Fortunately, as an employee you don't have to pay the insurance premiums alone. You are legally entitled to a subsidy from your employer. Below, we explain everything you need to know about the employer subsidy so that you can enjoy the full benefits of private health insurance.

What is the employer contribution to private health insurance?

The employer subsidy for private health insurance is a financial contribution that your employer makes to reduce the cost of your private health insurance. This subsidy usually corresponds to the share that your employer would also pay towards statutory health insurance. The aim of the employer subsidy is to offer employees with private health insurance similar support to those with statutory insurance. This allows you to enjoy the benefits of private health insurance as an employee without having to bear the often high contribution costs alone.

Requirements for the employer's contribution to private health insurance

In order to benefit from the employer subsidy, you must meet a number of requirements:

• Exempt from health insurance: To be entitled to the employer subsidy, you must be exempt from insurance or exempt from compulsory insurance as an employee. This means that your income this year and probably next year must be above the annual income threshold. In 2024, this limit is €69,300 gross per year, which is around €5,775 per month
• SHI benefits: You must have taken out private health insurance that offers the prescribed minimum cover. This means that it must cover at least the benefits of statutory health insurance
• Certificate from your private health insurance provider: Your employer must have an official certificate from your insurance provider confirming the above requirements and listing your contributions. You can obtain the certificate from your insurance provider on request. You must submit it to your employer again every three years
• Right of termination: You will only receive the employer subsidy if your insurer waives the right of ordinary termination. This must be stated in your contract

Amount and calculation of the employer's contribution

Your employer will subsidize half of your private health insurance contributions. They do not have to pay more than the amount they would pay for statutory health insurance. In 2024, the maximum amount of the employer subsidy is around €421.77 per month. In fact, your employer may also pay a higher subsidy, but is not legally obliged to do so. In this case, the allowance counts as pay. You must therefore pay tax on the additional payments.

The exact amount of the employer's subsidy depends on your individual insurance contribution and is calculated on the basis of your private health insurance premium invoice.

Advantages of the employer contribution to private health insurance

The employer subsidy for private health insurance naturally has a number of advantages for you:

• Cost savings: The subsidy reduces your monthly expenditure on health insurance. As contributions to private health insurance are usually quite high, this is a major advantage
• Tax-free: The employer subsidy is tax-free. However, if the subsidy exceeds the statutory amount, the additional payments must be taxed
• Family allowance: Your dependents can also benefit from the employer's allowance. However, this is only possible if your employer's allowance has not yet been fully used up. In addition, your dependents must not be self-employed as their main occupation and their income must not exceed 505 euros per month. As there is no family insurance in private health insurance, the subsidy is very useful. After all, a separate insurance policy must be taken out for each family member

Tax aspects and legal principles

The employer's contribution to your private health insurance is tax-free. It is not part of your taxable gross income and therefore does not have to be declared in your tax return.

The Social Security Code (SGB V) determines the legal basis. The amount of the subsidy and the conditions are regulated here. According to § 257 SGB V, the employer is obliged to pay the allowance if the above-mentioned conditions are met.

Applying for and processing the employer subsidy

You can usually apply for the employer subsidy by submitting your insurance policy and contribution invoice to your employer. Your employer checks the information and includes the subsidy in your payroll. If your insurance premium changes, for example if the insurance company adjusts the premium, you must also submit the new data so that the subsidy can be changed accordingly.

Comparison of statutory and private health insurance

Private health insurance often offers more comprehensive benefits than statutory health insurance. These include, for example, shorter waiting times and better conditions for hospital stays. However, private health insurance is generally more expensive and therefore requires careful consideration of the individual advantages and disadvantages. The advantages include

• Individual rates: You can customize the scope of your insurance cover and adapt it to your needs
• More comprehensive benefits: Private health insurance plans often cover benefits that are not included in statutory health insurance, such as single rooms in hospital or extended dental care
• Faster appointments: privately insured persons receive appointments with specialists at short notice and benefit from shorter waiting times

However, despite the advantages, private health insurance also has some disadvantages:

• high contributions: The insurance premiums are usually quite high and, minus the employer's contribution, you have to pay them yourself. Premiums can rise, especially with age, as old-age provisions are often not sufficient to cover the costs
• Costs: Health insurance incurs monthly costs, which vary depending on the scope of benefits and insurer. Weigh up whether you can afford the premium costs. However, you should also bear in mind that without benefits you will have to cover the costs of these medical treatment yourself
• No family insurance: unlike statutory health insurance, each family member must be insured separately, which incurs additional costs

So whether private health insurance is the right decision depends very much on your individual situation.

Private health insurance costs and benefits

The costs of private health insurance vary greatly. They depend on

• your insurer
• the tariff you choose and the benefits it includes
• your state of health
• your age

It is therefore not possible to make a general statement about the costs of private health insurance. The benefits of private health insurance can be adjusted individually. In principle, you benefit from the following private health insurance benefits

• Free choice of doctor and hospital: You have the freedom to choose your own doctor and hospital
• Dentures and orthodontics: private health insurance offers comprehensive benefits for dentures and orthodontic treatment in many tariffs
• Alternative practitioners: Costs for alternative healing methods and alternative practitioners are covered by many private insurers
• Single-bed room in hospital: With private health insurance, you benefit from accommodation in a single or double room

Comprehensive private health insurance with employer contribution

The employer subsidy for private health insurance provides you with important financial relief. It covers part of the often high contributions and ensures that the support is similar to that of statutory health insurance. The subsidy is tax-free and can also be used for family members, which is particularly advantageous due to the lack of family insurance in private health insurance. Nevertheless, you should carefully consider the high costs of private health insurance and the requirements for applying for the subsidy. If you are self-employed, for example, you will have to pay the insurance premiums entirely on your own. This can lead to a major financial burden. For employees with private health insurance, the employer subsidy is a helpful way to reduce the financial burden of private health insurance. We will be happy to help you decide whether and which private health insurance is best for you.