Insurance

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Insurance: It's the Law

In Germany, insurance isn't just a good thing to have -- it's mandatory. Here's a quick primer on what you'll need.

If you are planning to spend more than six months in Germany, or have moved here in a job-related capacity, there are some things you need to know about insurance, which is in some cases mandatory.

Health Insurance Options in Germany - 2008

Germany has one of the best health care systems in the world, providing its residents with comprehensive health insurance coverage. The health insurance reform 2007 requires everyone living in Germany to be insured for at least hospital and out-patient medical treatment.

The options available to you for health insurance while living in Germany are the government-regulated public health insurance system, private health insurance from a German or international insurance company or a combination of the two.

Government Health System

Most German residents are members of the government health system (Gesetzliche Krankenversicherung or GKV). If your gross annual salary is below 48,150 Euros per year or 4,013 Euros per month, membership in the GKV is mandatory. The total cost of government health insurance is currently approx. 15% of your gross salary up to a maximum monthly income of 3,600 Euros. If you earn more than this amount your insurance premium remains constant. Your employer will normally pay slightly less than half of the monthly premium.

GKV benefits include in-patient (hospital) care as a ward patient with doctor on duty at your nearest hospital, out-patient care with registered doctors (Kassenärzte) and basic dental care. Your non-working dependents resident at your address in Germany are included in your insurance at no additional cost.

Members of the GKV will join one of the 250 "Krankenkassen" in Germany (non-profit associations administrating the government health scheme). The health insurance funds adhere to established government regulations on what they offer.

You and your dependents are automatically enrolled in the government long-term nursing care scheme (Pflegeversicherung). This presently costs 1.95% of your gross salary (a maximum of approx. 80 Euros per month) of which your employer pays half.

For those seeking to upgrade their medical coverage, for instance the right to consult a private doctor, to homeopathic remedies, a private room in hospital and higher dental reimbursements, supplemental insurance coverage is available which can top up the government system benefits.

Private Medical Insurance

You may opt for private health insurance (Private Krankenversicherung or PKV) instead of joining the government health plan if you can show that your gross annual salary is presently more than 48,150 Euros and has been more than 47,700 Euros per year for each of the past three years. If you cannot or do not, you will automatically be registered as a voluntary member of the government system and will not be able to change to a private insurance plan until you have been a member of the government system for up to 3 years. It is important to take this decision at the outset when or before arriving in Germany, to avoid being forced into the government system by default.

Generally, private health plans cover a wide choice of medical and dental treatment and provide broad geographical coverage. Private patients generate higher earnings for medical professionals and will usually be treated by senior doctors. A private patient can also request and will often get, doctors who speak their native language.

The cost of full medical insurance is based on the benefits chosen, as well as on the age, gender and any pre-existing conditions of the insured. You can reduce the monthly cost of your private insurance by agreeing to a deductible. Please be aware that private insurance premiums are based on the insured individual and do not automatically include your dependents who will be covered under your policy at their own individual rates. Limited term (often 5 year) policies will often refuse to continue their cover at maturity if you have claimed under your policy; thereby leaving you to find new cover at potentially very disadvantageous rates.

By purchasing a private medical insurance plan from a German health insurance company that provides a certificate recognized by the German government (Arbeitgeberbescheinigung) you take advantage of the same employer subsidies as a government plan member.

Please note that everyone, whether state or privately insured, must pay into the government long-term nursing care scheme.

Sick Pay Insurance

Should you fall ill while in Germany, your employer will usually pay your full salary for the first six weeks. After that, either the government scheme health insurer or your private insurer will provide a measure of income replacement. The government scheme will pay a percentage of your income up to a maximum of approximately 2,200 Euros per month as statutory sick pay for up to 78 weeks. If you are earning more than this per month, it would be worth considering the purchase of supplemental sick pay insurance, which is available at reasonable rates. Privately insured individuals can purchase cover for their entire net salary.

Dental Care

In Germany, dental care can be expensive. For major dental work involving bridges, crowns or orthodontics, you must get a cost estimate and present it to your insurer prior to treatment. The reimbursement amounts in the GKV are calculated based on a fixed price depending on the case and you can expect to pay between 30% and 80% out-of-pocket for dental work under the government system and do not have supplemental dental insurance. Private insurance companies offer a wide variety of dental tariffs to meet individual needs.

Pharmacies

Germany has an extensive network of pharmacies. The statutory national health insurance generally provides reimbursement for prescription generic drugs, though with a co-payment, the scale of which depends on the cost of the medication. Prescription drugs for children have no co-payments. If you are privately insured, brand-name medication will be covered, as long as you have a prescription. You will have to pay the full cost of the prescription medicine at the pharmacy and then submit the bills to your insurer for reimbursement.

Also see our article "Health Insurance" for a more detailed explaination of Health Insurance Options in Germany.

Copyright
Cathy J. Matz-Townsend
International Insurance Broker
Hainstrasse 2
61476 Kronberg, Germany
www.insure-invest.de

All information as per July 2008 - no guarantee for accuracy or completeness.

For an expanded explanation of health insurance see the separate article here.

Personal Liability Insurance

This is mandatory in the case of automobiles (See the separate article on driving). You can also get insurance covering other cases of liability for injury or damage to other persons or their property. You are covered whether the negligence was yours or that of a family member or even your pet. It is highly recommended if you rent a house or an apartment.

Accident and Disability Insurance

Most accident insurance will pay protection in case of death or a daily sum if you are hospitalized or written sick. It may even pay damages in case of injury and any cost relating to cosmetic surgery. Disability insurance pays a lump sum, the size of which depends on the degree of injury. The least expensive version is the reine Risiko-Unfallversicherung, which has a low premium and pays a large lump sum in the event of disability. The catch is that it doesn't pay for lesser injuries, such as a broken arm or leg.

Home Insurance

Household Insurance (Hausratversicherung), covering the contents of your home against fire, water damage, theft, vandalism and hail, isn't required by law in Germany. But it is recommended and some landlords demand it.

Policyholders should make sure they insure their household goods for their full value and maintain a current list of all personal items such as furniture, home entertainment equipment, jewelry and antiques. Some policies even pay for hotel stays during the renovations that are necessary for claimants. Most people in Germany insure their homes for €600 per square meter of living space. Hence a home of 150 square meters would be insured for about €90,000, and the premium for such a policy would be somewhere between €80 and €100 a year.

In the event of damage, contact your insurance agent immediately by phone and by registered letter. In the case of theft you must prove what was stolen. Receipts, inventories, guarantees and photos are very helpful.

Legal Insurance

(Rechtschutzversicherung) covers any legal costs you encounter, up to €150,000. And, if you want to countersue, it will pay as long as there is a reasonable chance of winning. Legal insurance can be purchased for the entire family, for the job (Arbeitsrechtschutz) and for traffic infractions (Verkehrsrechtschutz) . If you're renting your apartment or house, it's a good idea to have Mietrechtschutz insurance, which can cost up to €60 per year).

Life insurance

(Lebensversicherung) isn't considered very important in Germany. The social insurance system is stable and dependable, especially for taking care of the family if something happens to the breadwinner.

However, changes in the hugely expensive social systems may be in the wind, and in any case the foreign visitor might not be able to take full advantage of it. Life insurance in Germany is essentially the same as that available in most western countries. Varieties of it include whole life, which can generate annuities or lump sum payments after a certain amount of time (usually 12 years); term life policies that pay death benefits to surviving family members or other beneficiaries, and variable dynamic policies that grow at different rates over the years.