It’s that time of year again: the German government has just announced the new contribution assessment thresholds for social security that will apply from January 1, 2021. As usual, the contribution ceilings have gone up - meaning that some people could end up paying more.

Social security contributions to increase for high earners in 2021

Every October, the federal cabinet sets new calculation parameters for contributions to statutory health insurance, long-term care insurance and pension insurance. The adjustment is based on a number of factors, such as the development of salaries in Germany, and ensures the stability of the social security system.

Anyone working in Germany contributes a percentage of their wages to social security every month, up to a maximum “assessment ceiling” that is recalculated every year. Every time this limit increases, more of an employee’s income becomes subject to contributions, meaning that high-earners especially can expect to see the cost of their statutory insurance go up. 

Germany’s social security contribution thresholds for 2021

From January 1, 2021, therefore, the income threshold for statutory health insurance and long-term care insurance will increase to 58.050 euros per year (4.837,50 euros per month). This is an increase of 150 euros per month - the same as last year. 

The compulsory insurance limit will increase to 64.350 euros per year (5.362,50 euros per month). This limit determines whether or not you are obliged to take out statutory health insurance; anyone whose earnings exceed the compulsory insurance limit can switch to private health insurance, if they wish. Equally, if you’re already privately insured, but your earnings now fall under the limit, you can switch back to statutory health insurance.  

A new income limit will also apply to the calculation of contributions towards statutory pension insurance from January 1, 2021. From next year onwards, the 18,7 percent contribution (which is split between you and your employer) will be payable on up to 7.100 euros of your salary per month in the western (old) federal states and 6.700 euros per month in the eastern (new) federal states. For miners’ pension insurance, this limit will increase to 8.700 euros in the west and 8.250 euros in the east. 

The new contribution rates will mean that high earners especially will see their social security contributions increase - by perhaps as much as 551,76 euros per year, not including any additional charges (Zusatzbeiträge) charged by health insurance contributions.