When does it make sense to switch to private health insurance in Germany?

Not everyone is free to choose between public and private health insurance in Germany, but if that option is open to you, it’s a question worth careful consideration. Michael Ruppel from Expat Compass Germany looks at some situations where it might make sense for you to switch to private insurance. 

Do you still remember your first days and months in Germany? Arriving in your new apartment, adjusting to the new environment and your first day at work: it was an exciting time with a lot going on - including a lot of German bureaucracy. 

For example, you would have had to register with a German health insurer. Most likely, you didn’t think about it too much and simply signed up with the company suggested by your employer. 

Now, however, that you’ve been here a while and know your way around a bit more, you might be hearing from some colleagues that they are saving money by switching to private health insurance (private Krankenversicherung or PKV) and are able to get more treatments covered and secure appointments more quickly. You might be wondering, “Is this something for me?” 

There are a lot of pros and cons when it comes to health insurance. To find the best option for you, you need to consider the consequences of switching out of the public system and into the private one. 

The current situation with health insurance in Germany

Statutory or public health insurance in Germany still comes with a few interesting advantages, for instance that you can also cover your dependents at no extra cost. 

In the long term, however, statutory health insurance will come under so much pressure that contributions will almost certainly rise sharply, while benefits will have to be drastically reduced. Contribution increases and benefit cuts have already been a reality for decades, as the original idea of the social system - under which the young working population covers the costs for older beneficiaries - no longer works. 

The system already only works today with billions in tax subsidies - what about the future? In 20 years, the number of over-60s in Germany will triple and the number of employees will halve.

According to several studies, a contribution of between 35% and 40% would be necessary to maintain the level of benefits at today's level in 20 years' time. Compare that to the 16,2% currently paid. 

Even the otherwise timid political voices are currently making clear statements about the lack of future security for social systems in Germany. Finance Minister Christian Lindner, for instance, recently said that “pension, health and long-term care insurance cannot be financed in their current form in the long term.” 

For expats in Germany, there are a number of future scenarios that could make a switch to private health insurance advisable. There are, however, also a number of scenarios in which it would make less sense. If you earn more than 69.300 euros gross per year, or are self-employed, you can opt to take out private health insurance. If this is you, consider the scenarios below. 

Scenario 1: You plan to stay in Germany for the rest of your life

The forecast changes to the social security system due to the ageing of the German population will affect you as an expat in this scenario, and you will face rising contributions and reducing benefits over time. Statutory health insurance will not help you stay healthy, but will cover you if you have serious health problems.

If you want to avoid rising contributions in future, private health insurance might represent an alternative. Be cautious, however, as most private insurance companies increase premiums over time (as the insured person becomes older, and therefore riskier to insure). Once you have opted into the private system, it can also be very difficult to switch back to the public one.  

Opting for high-quality private health insurance with a solid, experienced company with a strategy for the long-term financing of premiums might be your best bet. Many companies offer an option to keep premiums more stable, under which you pay more during your working life to benefit from lower premiums after you retire. 

Scenario 2: You plan to stay in Germany only short-term and you don’t have a family to support 

If you are not planning on staying in Germany long-term, and you don’t have (m)any dependents who also need health insurance, private health insurance might be a good option for you. 

The rationale is: why should you as an expat with a high tax burden also pay massive social security contributions to finance a system that offers you minimal benefits compared to the private system, a system that you are unlikely to use at all in future? 

In this situation, opting for private insurance could help you save a lot of money, while also offering you the same or even better benefits than statutory health insurance. Maximise your savings by choosing a reputable private health insurance company (your plan doesn’t need to have a strategy for old age financing, since you won’t be remaining in Germany) and making sure it offers high premium refunds if you don’t make a claim. 

Scenario 3: You are staying in Germany short-term, but you have family members without their own source of income

If you have to insure your spouse and more than one child in private health insurance, it can quickly become expensive. Statutory health insurance in Germany, on the other hand, offers the option of insuring your dependent spouse and children for no extra cost. 

In this scenario, a switch to private health insurance makes little sense, especially if you are not planning on staying in Germany long-term. Statutory health insurance therefore is the better solution, offering free family insurance. You could also add supplementary insurance for inpatient treatments. 

Consult with an insurance broker to make the best of your situation

This guide is intended as a basic overview to point you in the right direction when it comes to choosing between public and private health insurance. Health insurance is a very important topic, and so naturally it is also very complex. To make an informed choice, it is wise to consult with an insurance broker who has access to the entire market. 

Expat Compass Germany is a brokerage with more than 20 consultants and over 25 years of experience helping expats make the best decisions when it comes to their health insurance. Get in touch to arrange a consultation.