Private health insurance in Germany – an overview
The decision to go for statutory or private health insurance in Germany could be a tough one to make for you and has implications for decades to come. This article helps you with your research by listing the advantages and disadvantages for you.
Summary of this blog
Private health insurance (PKV) offers numerous advantages, such as additional benefits and shorter waiting times. However, it also has some significant disadvantages in certain situations and statutory health insurance (GKV) could be better. Therefore, the decision to opt for or against private health insurance should be made with careful consideration.
Contents of this article
- Advantages of PKV
- Disadvantages of PKV
- Differences between PKV and GKV
- For whom could PKV be good idea?
- Summary
Advantages of PKV
- Guaranteed Benefits: The benefits promised in your contract will remain available to you as long as you maintain your policy.
- Priority Treatment: Privately insured individuals often enjoy preferential treatment over those with statutory health insurance, leading to shorter waiting times for medical appointments and procedures.
- Competitive Rates: Premium private health insurance policies are more cost-effective than statutory health insurance, especially for young and healthy individuals.
- Premium Refunds: If you don’t use medical services during a policy year, some PKV policies offer premium refunds or bonuses.
- Adjustable Benefits: You can choose and adjust your coverage according to your needs, including options like free choice of doctors, dental treatments, or daily hospital benefits.
- Surplus Participation: Some private insurers share their profits with policyholders in the form of surplus participation.
- Global Coverage: You can often extend your coverage to include medical services abroad, providing peace of mind while traveling.
- Individual Age Reserves: Some PKV policies allow you to build individual age reserves to help finance higher premiums in old age.
- Self-Deductibles: You can choose self-deductibles to reduce your premium costs, which is especially powerful if you are self-employed.
- Income Irrelevance: Unlike statutory health insurance, your income does not directly affect your premium rates.
- Specialized Tariffs: There are specialized PKV tariffs designed for specific professional groups like civil servants, doctors, or students.
Disadvantages of PKV
- Individual Premiums: Each family member must pay separate premiums in PKV, whereas statutory health insurance (GKV) often allows children to be covered at no additional cost. However, for a double income couple with up to two children, PKV could still be advantageous.
- Higher Premiums for Pre-existing Conditions: If you have pre-existing health conditions, a risk surcharge could be added to your premium. After your condition is healed however, this surcharge could be removed.
- Limited Ability to Return to GKV: Returning to statutory health insurance from private health insurance is only possible when you drop below the income threshold and you are under 55 years of age.
- Upfront Payment: In PKV, you will receive medical bills to your home address and you are responsible for paying it on time, while in GKV, the statutory health insurance pays directly to the healthcare provider. A good PKV provider pays invoices within several days, long before the invoices to your healthcare provider are due.
- No Premium Exemption for Longer Illnesses: In GKV, you’re exempt from premium payments during extended illnesses (beyond 6 weeks), which is not the case in PKV.
- Health Assessment: Private health insurers typically require a health assessment before accepting you, and any pre-existing conditions can result in higher premiums.
- Transfer of Age Reserves: If you switch providers in PKV, you can usually only transfer a portion of your age reserves, and the health assessment may work against you, potentially resulting in higher premiums.
Differences between PKV and GKV
| Private Health Insurance (PKV) | Statutory Health Insurance (GKV) | |
| Who is eligible for insurance? | Employees with a monthly income of 5,550 euros or more (2023) can opt for private insurance. Self-employed individuals, civil servants, and students can privately insure themselves regardless of income. | Generally, every citizen. There is an insurance threshold up to 5,550 euros per month (2023). Those with higher incomes can voluntarily join the GKV. |
| Enrollment | Private health insurance has the option to accept or reject applicants. This does not apply to the basic tariff. | Everyone must be accepted. |
| Benefits | Customized selection of suitable benefits. Overall, there is a wider range of services available. | Benefits correspond to standard care and are legally mandated. Additional benefits can be offered. |
Costs and reimbursements
| Private Health Insurance (PKV) | Statutory Health Insurance (GKV) | |
| Costs | Contributions to private health insurance are income-independent and depend on starting age and health condition. | Employees and employers share the contributions. Civil servants and self-employed individuals pay the full contribution. Students and voluntary insured individuals with low income pay a minimum contribution. |
| Invoicing | Initially, the insured individual is responsible for billing. The costs of billing are reimbursed later (submitting invoices in private health insurance). | When it comes to invoicing, insured individuals do not have to pay upfront. |
| Contribution Refund | Typically, 2 to 6 monthly contributions per year are refunded for not using health services, including the employers part of the contribution. | Only possible when selecting an optional tariff with contribution refunds. Maximum refund is 1 monthly contribution per year, with a legal cap of 600 euros. |
| Budgeting | Medical services provided by doctors are budgeted by the government. This can lead to long waiting times for certain services. | There is no budgeting, and there is a guarantee of services for insured individuals. |
Switching and Additional Conditions
| Private Health Insurance (PKV) | Statutory Health Insurance (GKV) | |
| Family | Spouses and children must be individually insured. Half of the maximum GKV contribution can be reimbursed by your employer. | Spouses and children up to 25 years old can often be insured at no additional cost (family insurance). |
| Coverage Area | PKV is valid throughout Europe and for at least 1 month worldwide (PKV abroad). | GKV is valid for up to 6 months in the EU and in countries with a social security agreement. |
| Regarding Age | PKV benefits are guaranteed. Age-related reserves are intended to offset potential cost increases. Benefit reductions are excluded. Contributions increase on average below 3%. | GKV benefits are not guaranteed. Given rising healthcare costs, contributions increase on average by 3,6%. |
| Switching and Termination | Policyholders can terminate their coverage up to 3 months before the end of the insurance year. Switching is only in some cases beneficial. | To switch to another GKV, you must have 12 months of insurance coverage. A switch is then possible at the end of the following month. |
Is PKV or GKV better for me?
Based on the advantages and disadvantages mentioned above and the comparison between private health insurance (PKV) and statutory health insurance (GKV), we can identify for whom private health insurance is most beneficial. There are also people for whom statutory health insurance makes more sense.
For Employees:
The key factor here is the level of income:
- If your monthly income consistently exceeds €5,550 (monthly income threshold for 2023), private health insurance is generally recommended.
- If your monthly income is below €5,550, private health insurance is not an option, and you must have statutory health insurance.
For Civil Servants:
The crucial consideration is eligibility for assistance (Beihilfe):
- Civil servants benefit from affordable supplementary coverage in PKV, regardless of the federal state they work in.
- GKV does not offer assistance in most cases (with some exceptions in a few federal states).
For Self-Employed:
Being self-employed you have the freedom to choose between statutory and private health insurance, and income plays a significant role:
- With a steady income, PKV is often more cost-effective.
- With a low income or for starters, voluntary statutory health insurance is usually more economical.
For Students:
For students, the health insurance of your parents is a critical factor, and they have a choice between PKV and GKV when starting their studies:
- If your parents are in PKV, are civil servants, or if you are over 25, PKV is usually more cost-effective (although not in every case—precise calculations are necessary).
- If both parents are in GKV and you are younger than 25, GKV is generally a much better choice, as family insurance with no additional contributions is possible.
For Married Couples:
The health insurance of the spouse plays a crucial role:
- If your spouse is privately insured, and you have a low or no income, PKV is often more cost-effective (although not in every case—precise calculations are needed).
- If your spouse is covered by statutory health insurance, and you have a low or no income, GKV is typically more advantageous, as family insurance with no additional contributions is possible.
- If both of you have an income, and one or both exceed the income threshold, PKV is usually the best option.
Conclusion
Private health insurance comes with both advantages and disadvantages, and its cost-effectiveness compared to the statutory health insurance alternative depends on individual circumstances. Factors influencing this decision include:
- Income
- Family situation
- Health condition
- Length of stay in Germany
- Occupation
To make an informed choice, it’s essential to gather detailed information about the conditions and requirements of private health insurance. Subsequently, comparing various offers is recommended. Please feel free to make an appointment at no cost to discuss your personal situation.
You can also use our free online calculator below to determine the costs of private health insurance in different plans.
