Corporate health insurance as a business expense: Optimising tax advantages for companies
27 May 2025
7
Minutes
Katrin Straub
CEO at nextsure
Company health insurance (bKV) is more than just a benefit – it can reduce your tax burden as a business expense. Discover how to take advantage of this benefit and what tax aspects you need to consider to make up to fifty euros per employee per month tax-free.
The topic in brief and concise terms
Contributions to company health insurance can be deducted as business expenses and may reduce the company's tax burden; for employees, the benefits are tax-free.
Up to 50 euros per month per employee can remain tax and social insurance-free as a non-cash benefit if certain conditions are met.
If the 50-euro limit is exceeded, there are various taxation models (individual, flat-rate, net wage) which should be selected carefully and in consultation with a tax advisor.
Quick Facts: bKV as a business expense at a glance
Companies can claim contributions to corporate health insurance (bKV) as business expenses. This reduces the taxable profit and thus lowers the company’s tax burden. For employees, the benefits from the bKV are usually tax-free.
Under certain conditions, the contributions for employees also remain free from tax and social security deductions. The so-called fifty-euro non-cash benefit exemption applies per month and employee. If this limit is exceeded, there are various models for taxation. Careful examination and documentation are essential for recognition as bKV as a business expense.
Practical Part: The bKV in Everyday Business – Examples and Calculations
The introduction of a company health insurance scheme as a business expense raises practical questions. A key point is adhering to the fifty-euro non-cash benefit exemption limit. If a company pays forty euros per employee per month for the company health insurance and does not grant any additional non-cash benefits, this amount remains tax and social security free for the employee. The company can fully deduct the forty euros as a business expense.
What happens if the fifty-euro limit is exceeded? For instance, if the company health insurance contribution is sixty euros per month, the entire amount becomes subject to tax and social security for the employee, unless a flat-rate taxation is chosen. Here are some options for this scenario:
Individual taxation: The company health insurance contribution is treated like regular salary. This increases the employee's gross income and is subject to their personal tax rate.
Net salary taxation: The employer additionally covers the taxes and social contributions on the company health insurance contribution. The employee's net income remains unchanged, but for the employer, this is the most expensive option.
Flat-rate taxation: Under certain conditions, the employer can pay the wage tax at a flat rate, for example, at thirty percent according to § 37b EStG.
Correct accounting in the payroll is crucial. An appropriate supplementary health insurance as company health insurance can thus become a real benefit for both parties. The exact calculation should always be carried out with a tax advisor to find the optimal solution for the company.
Expert Depth: Legal Basics and Design Tips for Occupational Health Insurance as Business Expenditure
The tax treatment of corporate health insurance as a business expense is anchored in the Income Tax Act (EStG). According to § 4 para. 4 EStG, expenses incurred by the business are deductible as business expenses. This includes the employer's contributions to corporate health insurance (bKV). It is important that the employer is the policyholder and the employee has no claim to a cash payout instead of insurance coverage in order to utilise the benefits-in-kind regulation according to § 8 para. 2 sentence 11 EStG.
Our expert tip: Create a provision agreement. This document states that the bKV is an additional voluntary benefit provided by the employer and not part of the salary already owed. This reinforces the character as a benefit-in-kind and can prevent discussions with the tax office. For the benefits the employee receives from the bKV, the tax exemption according to § 3 No. 1a EStG applies.
If the fifty-euro exemption limit is exceeded, flat-rate taxation options are available:
Flat-rate taxation according to § 37b EStG: With a rate of thirty percent (plus solidarity surcharge and possibly church tax), benefits up to ten thousand euros per year per employee can be taxed at a flat rate. It should be noted that this must then be applied uniformly to all such benefits in the financial year.
Flat-rate taxation according to § 40 para. 1 sentence 1 no. 1 EStG: This option is available for other compensation (requires, for example, annual contribution payment) up to one thousand euros per year per employee with a larger number of employees (often from twenty) and can lead to social security exemption. An application to the tax office where the business is registered is necessary for this.
The co-insurance of family members is often possible, but its tax treatment depends on the specific design and should be checked separately. It is advisable to examine the details of a private health insurance in the bKV context carefully. The complexity of the regulations makes consultation with your tax advisor essential to optimally structure corporate health insurance as a business expense.
Distinction and Combination Options: bKV and Workplace Health Promotion
It is important to differentiate between company health insurance (bKV) and tax-free health promotion according to § 3 No. 34 EStG. While the bKV primarily aims at coverage in case of illness and offers improved medical services, health promotion focuses on preventive measures. Employers can spend up to six hundred euros per employee per year on certified courses for stress management or back training, free of tax and social security contributions.
These two instruments are not mutually exclusive, but can complement each other sensibly. A company can, for example, offer a bKV that covers dental prostheses and chief physician treatment, and additionally finance yoga courses as part of health promotion. The bKV contributions fall under the fifty-euro non-cash benefit exemption limit or are subject to flat-rate taxation, while the expenses for the yoga courses can fall under the six hundred euro limit of § 3 No. 34 EStG. This creates a comprehensive package for employee health. The company pension scheme is another component of employee benefits that should be considered separately.
Securing long-term benefits: Employee retention and corporate image through the bKV
Implementing a company health insurance as a business expense offers more than just tax reliefs. It is a powerful tool for retaining and attracting employees. In times of skilled worker shortages, a company health insurance with attractive benefits can make the crucial difference and reduce turnover by up to ten percent. Employees feel appreciated when the company invests in their health. This often leads to higher motivation and productivity.
Another advantage is the improvement of the company's image. An employer who goes beyond the usual level of care for their workforce positions themselves as socially responsible and modern. This can increase attractiveness among potential applicants by up to fifteen percent. The correct tax treatment, such as the utilization of insurance in the tax return, is an important aspect. Investing in a company health insurance pays off on multiple levels and supports sustainable personnel policies.
The Path to the Optimal bKV Solution: Consulting and Implementation
The selection and introduction of company health insurance requires careful planning. First, the needs of your employees and the financial capabilities of the company should be analysed. There are numerous providers and tariff models that differ significantly in terms of benefits and costs. Therefore, comparing various offers is essential. For example, HanseMerkur offers special corporate health insurance tariffs tailored to different company sizes and industries.
The tax component needs to be considered from the outset. Discuss with your tax advisor which taxation model (benefit in kind, flat-rate taxation) is most advantageous for your company. DKV points out that each employer's internal circumstances are different, and the tax implications of contract design must be examined individually. Clear communication about the new benefit to employees is crucial for acceptance. Also consider the possibility of tax deducting direct insurance schemes as part of your overall strategy for employee benefits. With a well-thought-out approach, company health insurance becomes a valuable tool for your business.
Request an individual risk analysis now: Have your insurance situation examined free of charge and receive concrete optimisation suggestions.
More useful links
Haufe offers a detailed article on the tax treatment of company health insurance.
Wikipedia provides a comprehensive overview of company health insurance.
PKV-Verband provides information in a press release on the success of company health insurance as a model for better prevention.
Handelsblatt highlights the growing popularity of company health insurance among businesses.
Bundesgesundheitsministerium offers information on corporate health promotion.
IHK München provides information on the tax aspects of corporate health promotion.
AOK explains the tax incentives for measures undertaken in corporate health promotion.
Statistisches Bundesamt (Destatis) provides data on healthcare expenditures in Germany.
GKV-Spitzenverband provides information on prevention and corporate health promotion.
FAQ
Can I always deduct the company health insurance as a business expense?
Yes, contributions to company health insurance paid by the employer are generally deductible as business expenses according to § 4 section 4 EStG, as they are business-related. This also applies to any flat-rate tax that may be incurred.
What happens if the bKV contribution exceeds the 50 euro allowance?
If the value of the non-cash benefit (including bKV and any other benefits in kind) exceeds the €50 exemption limit, the entire amount becomes subject to tax and social security contributions for the employee, unless the employer opts for a form of lump-sum taxation (e.g., according to § 37b EStG or § 40 EStG).
Do my employees have to pay taxes on the benefits from the company health insurance?
No, the benefits received by employees from the company health insurance, such as subsidies for vision aids or dental prostheses, are tax-free for the employees in accordance with § 3 No. 1a EStG.
What role does the supply regulation play in company health insurance?
A supply rule is advisable to clarify that company health insurance is a voluntary additional benefit provided by the employer and not part of the regular salary. This supports the argument for treating it as a benefit in kind and can help avoid tax disadvantages.
Can I also include family members of my employees in the supplementary health insurance?
Yes, many bKV tariffs allow the insurance of family members. However, the tax treatment of these contributions must be considered separately, as this may be regarded as an additional benefit to the employee or a benefit to third parties (§ 37b EStG). It is advisable to seek clarification with a tax advisor here.
Is company health insurance the same as corporate health promotion according to § 3 No. 34 EStG?
No, these are two different things. The company health insurance (bKV) covers medical expenses. Health promotion under § 3 No. 34 EStG allows tax-free employer contributions (up to 600 euros annually per employee) for certified prevention courses (e.g. exercise, nutrition). However, both measures can be combined.
