Investment & Wealth
Health insurance for daily sickness allowances
adjustment of sick pay
Adjustment of Sickness Benefit: How to Secure Your Income Long-Term
An unchanged daily sickness allowance can quickly lead to significant gaps in coverage due to rising income or inflation. Discover how to optimally adjust your daily sickness allowance and gain financial security. Protect yourself from unexpected income losses of up to twenty percent or more.
The topic in brief and concise terms
A regular adjustment of your daily sickness allowance to your current income and inflation is crucial to avoid financial gaps of often over twenty percent in the event of illness.
Take advantage of contractual options such as dynamisations or adjustment rights in the event of salary increases, often without a renewed health check within certain deadlines (e.g. two months).
Actively inform your insurer about changes in your income (increase or reduction) to keep your insurance coverage up to date and prevent over- or under-insurance.
Why adjusting your daily sickness benefit is indispensable
Your income increases, but your daily sickness benefit remains the same? This is a common risk. A gap of twenty percent or more compared to net income is not uncommon. [10] Without adjusting the daily sickness benefit, you risk a painful financial difference in the event of a claim. Many underestimate the loss of purchasing power due to inflation over several years. An adjustment effectively protects your income. Remember, contributions to private health insurance can also change during the period you receive daily sickness benefits and need to be taken into account. [1] This dynamic makes a regular review every two to three years necessary.
The daily sickness benefit insurance is useful to close these gaps. Failing to adjust can result in you receiving only seventy percent of your last gross income in the event of a serious situation, which is often not enough to live on. [5] This highlights the necessity of actively engaging with your insurance coverage.
Legal foundations and contractual options for adaptation
The Insurance Contract Act (VVG) forms the basis for your daily sickness allowance insurance. Specific regulations for adjustments can often be found in the General Terms and Conditions of Insurance (AVB) of your policy. [1] Insurers are obliged to inform you about adjustment options. Many tariffs include clauses for dynamisation or adjustment in the event of a salary increase. [2] Utilise these contractual rights to safeguard your entitlement.
Some insurers offer an adjustment to general income development every three years. [3] In cases of salary increases, an adjustment is often possible without a new health examination if you apply for it within a deadline, such as two months. [3] Pay attention to the exact deadlines in your policy terms to ensure you do not miss a chance. The assessment of appropriateness ensures that overinsurance beyond your net income is avoided. [9] More on the difference between sick pay and daily sickness allowance can be found in our blog.
The following points are often relevant for adjustments:
Application deadlines after salary changes (often two to three months). [3]
Regular adjustment offers from the insurer (e.g., every three years). [2]
Adjustment without health examination up to a certain amount. [4]
Orientation towards current net income as an upper limit. [2]
Need to notify the insurer of income changes. [1]
The exact conditions can vary depending on the insurer and tariff; therefore, consulting your own documents or speaking with experts is always advisable.
Adjusting to Salary Changes: Here's How to Proceed
A pay rise is a joyous occasion and an important time to adjust your daily sickness allowance. Actively inform your insurer about the change in your net income. [9] Provide up-to-date salary statements to document the increase. A prompt notification ensures you have the opportunity to adjust without a renewed health check. Many insurers allow a period of two to three months for this. [3]
Even with a job change involving a different income situation, a review and adjustment of the daily sickness allowance is necessary. [2] Self-employed individuals should also monitor their income development and adjust the daily sickness allowance accordingly. Here, the average income of the last twelve months may be relevant. [4] A suitable daily sickness allowance insurance considers this flexibility. The adjustment is generally made as a percentage of the income increase. [9]
Dynamic Adjustment: Automatically More Security?
Some medical expense insurance plans include a dynamic option. This allows for a regular increase in the insured daily allowance without a new health check-up. [2] The adjustment often aligns with general wage trends or a fixed percentage, for example, every three years by ten percent. [3] Check whether your contract provides for such a dynamic and whether it is sufficient.
The dynamic is convenient, but it does not always replace individual adjustments for larger salary increases. [9] It provides a basic safeguard, which should be supplemented by individual actions. Note that even with dynamic adjustments, the daily allowance must not exceed your net income. [2] A common question is: How long is daily allowance paid for? The duration of payments is independent of the adjustment amount, but the amount itself is crucial for the total benefit period.
Advantages of a dynamic option can include:
Regular increases without health checks. [2]
Automatic inflation adjustment to a certain extent.
Ensuring a minimum standard when adjustments are made.
Less personal effort required for minor adjustments.
Nonetheless, it is important to keep an eye on the total amount and take additional action if necessary.
Expert tips for optimally adjusting your daily sickness allowance
Our expert tip: Review your daily sickness allowance at least every three years or whenever there is a significant change in your income. [2,9] Don’t calculate too tightly. Essential expenses plus a buffer of ten to fifteen per cent should be covered. [10] Also consider ongoing costs for your health insurance, which continue while you receive the daily sickness allowance. [1]
Look for tariffs with good and flexible adjustment options without health checks. [3,10] Document all income changes and communication with your insurer carefully. This can be crucial in case of later ambiguities. If you have any questions about the simultaneous payment of disability pension and sickness benefit, we are happy to advise you.
Important aspects for your checklist:
Determine current net income (average of the last twelve months). [4]
Fully capture ongoing monthly fixed costs.
Consider contributions for health and long-term care insurance in case of benefit.
Factor in inflation developments and future salary increases.
Check contract terms regarding adjustment periods and health checks. [3]
Clarify the possibility of adjustment even with an existing illness (often only possible through dynamic adjustment). [9]
Careful planning and regular adjustments are key to reliable coverage.
Avoid pitfalls and common mistakes when making adjustments
A common mistake is missing the deadlines for reporting salary increases. This can result in adjustments only being possible after a new health assessment, which can lead to issues if illnesses have occurred in the meantime. [3] Another pitfall is assuming that a level once set will always be sufficient. Inflation alone can create a significant gap over ten years. [1]
Do not rely blindly on automatic adjustments. [9] These are often limited to ten or fifteen percent every few years and do not always compensate for larger increases or sustained high inflation. Also, the maximum insurable daily rate under the policy must be considered. [10] A combination with occupational disability coverage should also be well-coordinated. Clarify whether and how the daily sickness benefit is paid in cases of partial incapacity for work or gradual reintegration, as this varies depending on the contract. [7]
Your next steps for optimal coverage
Get your daily sickness benefit policy to hand and check the current amount and adjustment clauses. Compare the insured daily benefit with your current net income over the last twelve months. [4] Calculate your monthly fixed costs to determine your actual needs. If there's a difference of more than ten percent, you should take action.
Contact us for a personalised analysis of your situation. We help you optimally adjust your daily sickness benefit and close gaps in coverage. An adjustment can often be made in a few steps, providing you with security for emergencies. Take advantage of the opportunity to secure your income in the event of an illness lasting more than six weeks. [2]
Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete optimisation suggestions.
More useful links
Wikipedia provides a comprehensive overview of sick pay.
The Federal Ministry of Health offers official information on sickness benefit.
The Federal Statistical Office (Destatis) supplies official data and statistics on sickness and incapacity for work in Germany.
The Consumer Advice Centre informs about the eligibility requirements and application process for sick pay.
The VDEK (Association of Substitute Health Insurance Funds) provides detailed information on sick pay from the perspective of substitute health insurers.
The German Pension Insurance explains the concept of incapacity for work in the context of social security.
The Federal Institute for Occupational Safety and Health (BAuA) provides data and analyses on the costs of incapacity for work.
Statista delivers statistics on the number of incapacity days by diagnoses.
The National Association of Statutory Health Insurance Physicians (KBV) offers insights into health data and their significance for healthcare provision.
The Federal Ministry of Finance informs about tax aspects and exemptions in personal insurance.
FAQ
Why is adjusting the daily sickness allowance so important?
Without adjustment, your daily sickness allowance can lose value due to salary increases and inflation. In the event of a claim, this can create a gap between your actual income needs and the allowance, which can quickly amount to several hundred euros per month.
What role does my net income play in the adjustment?
Your net income is the upper limit for the amount of daily sickness allowance. An adjustment aims to secure this amount, but not to exceed it, to avoid over-insurance.
What does dynamics mean in daily sickness allowance?
Dynamics means that your insured daily sickness allowance regularly increases (e.g., every three years) by a certain percentage or amount, often without a renewed health check. This helps maintain the value of the coverage.
What deadlines must I observe for adjustment following a salary increase?
Many insurers set a deadline of about two to three months after the salary increase, within which you can apply for an adjustment without a renewed health check. Check your policy conditions.
Can my insurer also reduce the daily sickness allowance?
Yes, if your net income permanently decreases, the insurer can reduce the daily sickness allowance accordingly to prevent over-insurance. However, they must inform you about this.
What is the difference between sick pay and daily sickness allowance?
Sick pay is a benefit of statutory health insurance. Daily sickness allowance is a private supplementary insurance that bridges this gap or provides income protection for those privately insured and the self-employed. The amount of daily sickness allowance is more flexible.
