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Since April 2017 only certain groups needed to have health insurance in Germany. The health insurance reform in 2009 made it compulsory for everyone to take out health insurance in Germany including self-employed persons.
Self-employed persons and freelancers in Germany can freely choose if they would like to be voluntarily insured in the public health insurance or be privately insured. The choice needs some consideration as public and private health insurance is fundamentally different.
Public Health Insurance for Self-employed
Public health insurance is calculated based on your income at a rate of 14.6%. Additionally an additional contribution rate of 1,6% (average for 2023) applies. A reduced contribution rate of 14% can apply under certain conditions.
Disadvantages for Self-employed in Public Health Insurance
While each persons situation is a bit different, disadvantages for self-employed and freelancers in public health insurance are:
- Low income self-employed persons may struggle due to the minimum health insurance contribution.
- High earners may pay a lot or even the maximum amount due to the contributions being calculated on the income.
- Sick-pay coverage is not from day one and requires additional protection and costs.
- Public health insurance plans often have long commitment terms.
- Long waiting times for appointments and treatments may lead to long periods with no income.
However, if you are a large family, the family insurance under a public policy covers all dependents as well. This means it may still be more cost effective when comparing to a private health insurance for every family member. The coverage and service may not be the same however.
Private Health Insurance for Self-employed
Private health insurance contributions are calculated on age, state of health, occupation and the level of coverage. This means that young persons, specially high earners, get a much better coverage/service vs. price compared to public health insurance coverage.
The insurance coverage by private health insurance companies are also more flexible, you can adjust your monthly premium by choosing individual services according to your needs.
Benefits of Private Health Insurance for Self-employed Persons
Private health insurance is popular among self-employed persons and freelancers. It is not only because the majority of self-employed persons are younger and healthy, but also because of the increased service and flexibility it provides. The main benefits with private health insurance is:
- Price is not dependent on income.
- Flexible insurance coverage.
- Shorter waiting times and fast appointments.
- Premium refunds and bonus programs when nothing is being claimed.
- Contributions can be adjusted based on service or increase in deductible.
Private Health Insurance is Tax Deductible
The cost of basic protection equivalent to public health insurance is tax deductible up to at least 80%. These are considered special expenses and can be added to your tax return. The health insurance company determines the exact amount (dependent on the services) and will issue you your tax certificate each year.
Changing from Private to Public Health Insurance
When self-employed persons decide to take out private health insurance, this decision is irrevocable. This means you become exempt from public health insurance and the only way to enter public health insurance is if you become an employee or in case of unemployment.
We can help you decide
As independent insurance brokers, we do not only advice you on what the best option is for you, but you also get access to the best insurance providers. You get free advice and the best price vs coverage for your needs.