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What insurance is important in Germany and what immigrants need to know about insurance and retirement planning in Germany.Inhalt dieser Seite
The most important facts in brief
Health insurance in Germany
Health insurance is mandatory
Immigrants and foreigners in Germany must take out health insurance just like any other person living in Germany. There are two health insurance systems in Germany that differ fundamentally: the statutory health insurance („gesetzliche Krankenversicherung“, GKV) and the private health insurance („private Krankenversicherung“, PKV).
In the following, we briefly explain both systems. A comparison of health insurance for foreigners in Germany can be found in the section „Statutory and private health insurance in comparison“ .
Statutory health insurance through a health insurance fund
Coverage with a public health insurance company is open to everyone – no one may be rejected. Therefore, enrolling in a health insurance fund is often the first option for immigrants. Compulsory health insurance is primarily available to the following groups of people:
- Employees whose gross income is higher than the current low-income limit of 520 euros, but is below the annual gross income limit of 66,600 euros (as of 2023).
- Students of public or state-recognized universities
- Trainees or school students in lower secondary education
- Elderly pensioners who were insured as a family member under the statutory health insurance scheme for most of their working life
- Unemployed people who receive financial assistance from public agencies, such as the Federal Employment Agency
The healthcare system in Germany
In this country, medicines, doctors and hospitals are comparatively expensive, so it makes sense to take out health insurance. Furthermore, you will not receive a residence permit if you do not have health insurance. Germany has the reputation of having one of the best health care systems in the world. The health care system has an extensive network of hospitals and doctors, even in the most remote regions of Germany.
Medical equipment is equipped with the latest technology
There are hardly any waiting times for treatment, as waiting lists are rare. Unlike in other countries, the medical health services are provided with the latest technology as well as facilities. Furthermore, the German health care system does not discriminate in the provision of care so that everyone has access to health care, regardless of which income class or social class they belong to.
Private health insurance for foreigners
If you meet certain requirements, you can take out private health insurance. Salaried employees must have a gross annual income of more than 66,600 euros (as of 2023). The pricing is very different from membership of a German health insurance fund: insurance premiums are not based on income, but on the individual health risk. In return, the insured can expect significantly better benefits in some cases.
Privately insured people must pay in advance for billing
While the health insurance company takes care of the billing of insurance services within the statutory health insurance, the situation is quite different in the private health insurance. Here, the patient acts as the physician’s contractual partner. As a result, the patient is billed by the responsible physician for the insurance services used. After the doctor’s bill has been checked for accuracy, the patient sends the bill to his private health insurance company for reimbursement and receives the payment back.
Unisex rates enable equal insurance benefits regardless of gender
The unisex tariff is an insurance tariff that is not based on the gender of the policyholder for the calculation. If women have to pay significantly higher costs when seeking treatment, the unisex tariff is intended to bring them into line with the insurance benefits of the male sex. As a result, women will receive the same insurance benefits as men without having to pay higher premiums. Unisex rates have applied to all new insurance contracts since December 2012.
Retirement provisions protect against high costs in the future
With increasing age, the costs for treatments and medications also rise. Accordingly, the premiums for private health insurance also generally become higher with age. This can be cushioned by so-called age reserves. Each year, you pay a portion into your age reserves. If you want to change your private health insurance, under certain conditions you can take your age reserves with you.
Statutory and private health insurance for foreigners in comparison
|criteria||Statutory health insurance||Private health insurance|
|Mode of operation||Solidaritätsprinzip|
|Calculation of costs||Based on income||Individual risk, personal state of health, age of entry|
|Entitlement to insurance benefits||Depending on medical necessity. In case of several treatments, the one with the lowest cost factor is covered.||Holistic assumption of costs|
|Billing||Health insurance||Patient pays in advance|
|Reimbursement of medications and treatments||Statutory co-payment||No co-payment|
|Benefits (selection)||Check-ups for early detection of diseases, vaccinations, free choice of doctor, inpatient stay for a daily allowance of €10 per day, medications and aids, spa stays, psychotherapeutic treatments||Check-ups for early detection of diseases, treatments by nonmedical practitioners, treatment by head physician, free choice of doctor and hospital, expensive dental treatments, medications, and aids|
|Payment||Employer and employee each pay half (additional contribution is paid by the employee alone).||The insured pays full insurance contribution, employer subsidy possible for salaried employees.|
|Insurance circle||Family members are co-insured||The individual insured. Each family member needs a separate contract in PKV.|
|About statutory health insurance (German)||About private health insurance (German)|
Health insurance for short-term stays
EHIC for students
Students from other countries can remain insured with the health insurance of their home country. The so-called EHIC (European Health Insurance Card) helps here. Holders of the EHIC receive medical care under the same conditions as a German citizen. If you want to stay longer or long-term in Germany, the so-called EHIC must be replaced by a corresponding health insurance with a health insurance company.
Short-term stays require exemption
If people coming from abroad are only staying in Germany for a short time and do not wish to change their health insurance, they must submit a confirmation from their health insurance company. This should confirm that any medical expenses are covered and should be in both English and German. The next step is to forward the document to a German statutory health insurance company so that the exemption from the statutory health insurance can take place.
Other mandatory insurances in Germany
Car insurance for car owners
If one is in possession of a car or motorcycle, the conclusion of a motor insurance policy with at least a liability insurance is obligatory. Even the registration of a car cannot be tackled without this policy. In case of damage, the insurance company will cover all costs. The amount of the insurance premium to be paid depends on the vehicle class, the age of the vehicle and the accident-free years.
Optional: The hull insurance
While motor vehicle liability insurance is mandatory, motor hull comprehensive insurance is voluntary. There are two types of hull cover:
Partial cover (Teilkasko):
- Glass breakage
- Lightning strike
Full cover (Vollkasko):
- All risks of the partial cover
- Damage to the vehicle caused by third parties
- Self-caused damage to the vehicle after an accident
Dog liability insurance for dog owners
If you own a dog, it must be insured with a dog liability insurance in almost all federal states. The pet owner is fully liable for any damage caused by the dog. With a dog liability insurance, all costs that the dog causes to other dogs, other persons or the property of third parties are reimbursed.
Useful insurances for immigrants in Germany
The following insurances are not obligatory, but nevertheless useful and recommended.
The majority of Germans consider private liability insurance to be the most important private coverage among all insurance policies. In the event of damage, liability insurance covers all costs arising from damage to third parties. The limit of the costs to be covered depends on the sum insured negotiated in the insurance contract. In addition, spouses, as well as children, can be included in the liability insurance. For a single person, liability insurance is available for as little as three euros a month.
Home contents insurance
The household insurance covers all objects in the house or apartment. In the event of theft or damage due to water, storm or fire, the household insurance covers all costs. The amount of the insurance premium to be paid depends on the size of the apartment. In any case, it is worthwhile to take out a policy as soon as there are valuable items in your own four walls. Household insurance can also be taken out for a shared apartment.
If you are permanently unable to work due to illness or an accident, there is occupational disability insurance. If you are unable to work, you receive a predefined occupational disability pension paid out monthly. The amount of the premiums depends on the profession practiced and the individual risk. It is worth taking out insurance at a young age, for example as a student.
Most accidents occur during leisure time
Through the employer, one is a member of the statutory accident insurance. If an accident occurs during working hours or on the way to and from work, the employee is insured. Nevertheless, most accidents occur during leisure time. By taking out private accident insurance, the accident event is covered, which may lead to occupational disability. In this case, depending on the severity, the insurance company pays a disability pension to the policyholder. If you want to be fully covered in the worst-case scenario, you can also integrate additional insurance benefits such as daily hospital allowance, spa allowance, cosmetic operations and salvage costs into the insurance policy.
Retirement provision and pensions in Germany
Statutory pension plans in Germany
In Germany, the principle of social security applies. Thus, every citizen is granted a certain standard of living. Similar to health insurance, every policyholder is responsible for each other. In general, the statutory pension scheme is financed by the employees‘ compulsory contributions. These are deducted from the employees‘ monthly gross wages. However, these contributions are not saved, but passed on directly to current pensioners. This phenomenon of passing on is also known in many places as the intergenerational contract. This means that the younger generation pays for the older population. Since fewer and fewer employees are financing the pensions of numerous pensioners, the retirement age was raised to 67 in 2012.
Child-rearing intervals are treated as contribution periods
How much pension can be expected at retirement age depends primarily on the amount and number of insurance contributions paid. It is not only employees who build up a pension, but also parents who spend time raising children. This is because child-rearing intervals are recognized as compulsory contribution periods for an average employee. Thus, for each child born before January 1, 1992, each child-rearing employee receives the first 24 months of life recognized as accrued pension contributions. In contrast, parents receive confirmed pension payments for 36 months for each child born after December 31, 1991.
The German Pension Insurance
While the statutory health insurance is mainly dedicated to the health welfare of its insured, the German pension insurance focuses on the old-age security of employees. In addition to paying out an old-age pension, the German pension insurance is consulted when it comes to obtaining a disability or survivor’s pension. As an institution of the statutory pension insurance, it grants all treatments related to medical as well as occupational rehabilitation. Thus, the purpose of the German Pension Insurance is to restore and improve the earning capacity of the working population.
Private pension insurance
Private pension insurance is one option for making private provision for old age. If a policyholder opts for this type of coverage, he or she usually opens a savings plan, which he or she saves for with monthly contributions until a certain point. Once the time has come, the policyholder has two options. Either the saved capital is paid out as a lump-sum payment, or the policyholder insists on receiving a monthly annuity. If the monthly annuity is chosen, the policyholder receives an annuity for the rest of his life. There are also various forms of private pension provision, from annuities and life insurance to investments and real estate.
Unit-linked pension insurance
In contrast to private pension insurance, the savings portion is invested directly in one or more investment funds. These investment funds invest in various securities and investments such as shares, real estate or bonds. The amount of the expected pension depends to a large extent on the performance of the investment fund. Against this background, it is advisable to select investment funds only after thorough research. This is because by no means every pension insurance company also has the most profitable funds available. If the selected fund shows a positive performance, good returns are possible. Nevertheless, one must also reckon with profit losses.
Riester pension is advantageous for low earners and families
Just as with all other forms of private pension provision, the Riester pension involves savings to build up a private pension. Monthly contributions are paid into an insurance contract. These monthly payments are increased over time by the annual state allowances, such as the basic allowance and the child allowance. This type of pension is particularly suitable for low-income earners and families. The earlier the conclusion of a Riester pension is considered, the sooner attractive returns can be realized.
Company pension plan
Employees have the option of providing for their old age through a company pension plan. The special feature is that the employer also pays into the private pension. Through deferred compensation, the contribution to the company pension plan is deducted from the gross salary so that the employee also benefits from tax and social security contributions savings.
Life insurance is primarily for the protection of the family and children. Should the policyholder die, the sum insured is paid out to the surviving dependents. This is especially recommended if there is a clear main earner in the family. However, there are also forms of life insurance in which capital is saved mostly for the insured. There are three basic types of life insurance:
Immigrants who intend to make a fresh start in Germany have to face a whole range of matters. In addition to taking out health insurance, it is also advisable to take out some precautionary insurance. It is advisable to take a close look at the subject and, if necessary, make comparisons or take advantage of advice so that the insurance tariff can be found according to one’s own profile.
Please note: To take out most insurance policies, you must be able to prove that you are a German resident and have a German bank account. Otherwise, a German insurer will not be able to insure you. So if you immigrate to Germany, take care of it in time so that nothing stands in the way of taking out important insurances.
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