Differences for expats and tourists
Are international health insurances legal in Germany?
International insurance providers are not located in Germany, but offer health insurance schemes that are used around the world. They are easy to set up, offer often good benefits for medical treatment of all kinds and are well accepted around the world.
But are they legal in Germany, i.e, are they eligible to be used as a law-compliant substitutive health insurance like a German private health insurance in lieu of the German statutory health insurance?
"International health insurance plans are not eligible as a substitute of German statutory health insurance"
The answer is, unfortunately, rather simple. Since 2016, when the relevant laws in the VAG (insurance supervision law) were changed the last time:
No, they are not!
The German financial services supervision authority (BaFin) says this about such health insurances:
"With regard to an insurance policy with an EU/EEA insurer, special features apply: on the one hand, with regard to the fulfillment of the insurance obligation and, on the other hand, with regard to the regulatory requirements for the distribution of corresponding health insurance products in Germany.
Policies offered in Germany, for example, must be calculated with an aging provision
, which is intended to protect the policyholder by preventing premiums from rising in old age. In addition, substitutive health insurance from EU/EEA insurers may only operate in Germany by way of service provision or via a branch office if the insurer has submitted the relevant general terms and conditions of insurance to BaFin. Stricter requirements, therefore, apply to the insurance policies offered by an EU/EEA insurer if it wishes to offer them in Germany.
There is currently not one international health insurance which fulfills the requirements as listed above by the BaFin. Therefore, the conclusion is obvious: You cannot use an international health insurance instead of a German private health insurance
because you need to comply with the German regulations and laws. Moreover, you may face rather hefty and unpleasant back-charges later if you ever need to switch into the German health insurance system
(for instance because you take on employment in Germany).
How international health insurances differ from German private health insurance plans
All persons residing in Germany who are not insured with statutory health insurance
MUST set up a private health insurance coverage. The requirements for such health insurances to be considered as substitutive health insurances is regulated by law. Section 193 VVG (Health insurance contract law):Subsection (3)
- Every person resident in Germany is obliged
to take out a medical expenses insurance with an insurance company licensed to do business in Germany for themselves and for the persons they legally represent, insofar as they cannot take out policies themselves, which includes at least reimbursement of costs for outpatient and inpatient medical treatment and in which the absolute and percentage deductibles agreed for outpatient and inpatient medical treatment for each person to be insured are limted to € 5,000 per calendar year for the benefits provided for in the plan.Section 146 of the VAG (
Insurance Supervision Act) stipulates that a health insurance may be provided in Germany only if it is "suitable to replace the health or long-term care insurance provided by the statutory social insurance system (substitutive health insurance)" and is offered in the form of a life insurance.
International private health insurance plans differ from German private health insurance policies in a number of non-compliant ways
1. Calculation of premium similar to a life insurance: Firstly, in contrast to private health insurance companies in Germany, the international private health plans are not computed like a life insurance, i.e. no money is set aside to cover the increasing health risks of older people. As a consequence, they are very cheap when you are young but become more expensive every year as you get older. Which is the first “fail to comply” point, as mentioned above by the BaFin.
2. Cancellation policy: Another major difference is that an international insurer will cancel your insurance plan when you fail to pay your premiums, something German health insurance companies are not allowed to do anymore. While the application process is usually relatively easy because of this in comparison to what you have to go through when applying for German private insurance, it also makes the international health insurance fail to comply with German laws entirely.
3. Excess amount: A health insurance in Germany must not have a higher deductible amount than €5,000 per year. Many of the international health insurances come with much higher deductible amounts or are even limited to a certain amount of coverage per year, which is not compliant with German laws.
4. Lack of coverage: Very often international health insurance plans lack a number of required areas of coverage in their standard benefits, like full coverage for pregnancy/maternity. This may be acceptable in their countries of origin, but it isn’t in Germany. Lack of this also makes them non-compliant with German requirements.
5. Requirement of so-called "basic" plan: On top of that, the VVG also specifies that every private health insurance in Germany has to offer a so-called BASIS plan, which covers everyone they would normally not accept because of severe medical conditions and offers coverage just like the public health insurance.
The German private insurance companies even went to the German Supreme Court to fight this, and lost. Ever since this verdict by the German Supreme Court from the summer of 2009, it is clear that a private health insurance can be legal tender in Germany only if it offers the BASIS plan. No international health insurance would even dream about doing something stupid like offering such a BASIS plan. German insurances only do this under protest and because the Supreme Court forced them to.
Facing penalty back-charges when switching to German health insurances
International Health Insurance is not a substitute for health insurance in Germany. The BaFin has ruled on this already. As have the German courts on several occasions. On top of that, the head association of German private health insurance (while certainly not unbiased in this) has also decreed that they deem international health insurance plans not to be legally compliant as substitutive health insurance under German laws.
Therefore, they will universally demand penalty-back charges from everyone who has been living in Germany and been insured "incorrectly" with an international health insurance. As soon as you want or need to switch to a German health insurance, they will find out. This can often happen when you have a chance of employment (because international insurances don’t work in employment in Germany at all for lack of tax recognition for employers). Or, just as often, because the immigration office (Ausländeramt) suddenly demands, after the first or second residence permit, full German health insurance.
This video goes into more details about the legality of most international health insurances in Germany:
How high will my back-charges be if I used international health insurance?
The back charges are computed like this: 6 full monthly premiums (assuming that you have been insured longer than 6 months with the international health insurance while residing in Germany), and after that for each consecutive months of failing to have compliant coverage with 1/6ths of the monthly premiums.
Example: you’ll sign up with a German private health insurance for a monthly premium of 500 EUR. You have used your international health insurance for 3 years in Germany.
You’ll be back-charged € 3,000 for the first 6 months plus another € 2,500 for the following 30 months.
Yet another problem of non-compliant international health insurances: missing “Pflegepflichtversicherung”
Last but not least: only in combination with a German health insurance you can obtain the likewise legally required “Pflegepflichtversicherung”. The long-term-nursing care insurance that each resident also has to obtain and hold as an obligatory piece of insurance coverage.
Failure to have one comes actually with penalties / fines from the government. These long-term-nursing-care insurances are only offered by German private or public health insurance companies and they do not offer them as a stand-along policy to people who have an international health insurance.
Exceptions: International health insurance can be used in those situations
At C R & Cie. we have dealt with international health insurances for more than a 15 years. Before 2016 there were little loopholes in the relevant laws that allowed the use of such insurances and still be compliant with German laws. This has changed. And in the given circumstance of legal uncertainty we do not recommend them anymore to the vast majority of Expats ever since. There are only very few exceptions to this.
Secondment: If you are being seconded by your foreign employer to work in Germany. Secondment requires certain legal procedures, though, it is not enough to just say: I am seconded. During secondment while you work in Germany, you are considered to stay outside the German social welfare system entirely, hence you can use an international health insurance because you only be privately insured in the first place as you have no access to German statutory health insurance anyway.
- Employment at EU, UN, NATO: If you work for the European Union, United Nations or NATO: they are allowed to have their own health insurance systems outside the German one and often use employer-paid international health insurance. Beware, though: if you work with an NGO or other institutions closely linked to either of the above-mentioned institutions but not being part of them, this exception may not apply to you.
- Short-term / limited stays: For EU-citizens (i.e. persons who do not require an official residence permit for staying in Germany) you can of course decide to use an international health insurance, especially if you know that you are only going to stay for a limited period of time in Germany (for instance for a project of 2 years duration or such). While you still won’t be in compliance with the German laws, nothing bad will happen to you as there is no “health insurance police” anywhere in Germany that controls people if they have a proper health insurance. However, if your stay extends longer and you find yourself needing to switch to Germany health insurance for tax reasons or because you become fully employed in Germany, you will face back charges from the German insurance companies. This is a planning risk you need to be aware of.
- Arriving in Germany: Sometimes the VISA-authorities will accept an international health insurance at the beginning when issuing your first residence permit. Which usually is time limited anyway. However often with already the first prolongation of your residence permit, i.e. when it looks like you are going to stay in Germany for longer, they will then insist on you providing now proof of fully compliant health insurance. Which then requires you to switch and, suddenly you’ll face back-charges. Therefore it is always better to start with compliant coverage right from the beginning.
Switch from International health insurance to law-compliant coverage
Now, there always will be Expats in Germany who for all kind of personal reasons have set up themselves with international health insurance for several years already. One of the reasons, can be that they found it impossible to join either a German public health insurance or a German private health insurance at the start of their stay in Germany.
As unjust as it may sound (and as unjust as it actually is): the same private German health insurance company that rejects your initial application for one of their insurance plans because they considered a self-employed new-comer to Germany as being too much of a credit risk will insist on levying a penalty back-charges when you’ll need to switch to a German health insurance.
For such cases we here at Chambervelt, Rooselain & Cie. have worked out together with the ASEIG (Association of self-employed Expats in Germany) a special group-plan. It is offered by a bona-fide German health insurance company of good reputation (HALLESCHE). It complies with both § 193 Abs 3 VVG and (!) § 257 Abs 4 SGB V and is thus a fully compliant substitutive German health insurance.
Only with this group insurance plan the German insurance company does waive any back-charges which otherwise they are legally beholden to collect from clients. It is a plan with excellent benefits and can be run for max. 5 years. After 2 years you’ll have the right to switch to any other insurance plans of the HALLESCHE without further health checks, i.e.
All other German private health insurance companies will also accept this insurance as law-compliant previous insurance coverage and thus you avoid facing these back-charges. Get more information about the ASEIG-group tariff for self-employed Expats through our experts.