Health insurance: What you need to know – A comprehensive guide
26.04.25
9
Minutes
Katrin Straub
Managing Director at nextsure
Health insurance is a complex but important topic for everyone in Germany. It provides cover in the event of illness, but what options are available and what exactly do they offer? This article explains what health insurance is and helps you gain a clear understanding.
The topic in brief and concise terms
In Germany, health insurance is compulsory; most citizens are insured under the statutory health insurance system (GKV), which is based on the principle of solidarity.
Private health insurance (PKV) is an alternative for certain occupational groups and income brackets and offers more tailored plans, with premiums based on risk and the scope of benefits.
The choice between statutory health insurance (GKV) and private health insurance (PKV), as well as taking out supplementary insurance, should be based on a careful analysis of personal needs, financial circumstances and long-term life planning.
Understanding the fundamentals of health insurance
Health insurance is a central component of the German social security system and ensures medical care. Its main task is to maintain, restore or improve the health of insured persons. In Germany, almost ninety per cent of the population is covered by statutory health insurance. The system is based on the principle of solidarity, whereby contributions are income-related but benefits are the same for everyone. Alongside the statutory option, there is private health insurance (PKV) as an alternative for certain groups of people. The choice between GKV and PKV depends on various factors such as income and professional status. This decision has far-reaching consequences for insurance cover and costs.
Statutory health insurance (GKV): solidarity and obligation
The statutory health insurance (GKV) is compulsory for the majority of the population in Germany. It is based on the principle of solidarity: members pay contributions in line with their financial capacity, but receive the same medically necessary benefits in the event of illness. The general contribution rate is fourteen point six per cent of contributory income, plus an individual additional contribution set by the insurer. Employees and employers usually share these contributions equally. Family members such as spouses without their own income and children can often be insured free of charge, which represents a considerable financial relief for families. The benefits of statutory health insurance are set out in Book Five of the Social Code (SGB V) and include medical treatment, medicines, hospital stays and much more. An important aspect is that statutory health insurance must accept anyone who meets the requirements, regardless of their state of health. This ensures broad access to medical care. Statutory health insurance is therefore a key pillar of the healthcare system.
Private health insurance (PKV): Individuality and options
Private health insurance (PKV) is an alternative to statutory health insurance (GKV), but it is not accessible to everyone. Self-employed people, freelancers, civil servants and employees with an income above the annual earnings threshold (in 2025: EUR 73,800 gross) can take out private insurance. In contrast to statutory health insurance, contributions in private health insurance are not based primarily on income, but on individual risk (age, health status at the time the contract is concluded) and the selected scope of benefits. A key advantage of private health insurance is often the individually customisable scope of benefits, which can go beyond the standard cover provided by statutory health insurance. Privately insured people can, for example, choose a single room in hospital or treatment by the consultant doctor. However, separate contributions must be paid for each family member; there is no free family insurance as there is in statutory health insurance. Switching from statutory health insurance to private health insurance should be carefully considered, as returning to statutory health insurance, especially from the age of 55, is only possible under certain conditions. Private health insurance also builds up ageing provisions to keep contributions more stable in later life. This is an important difference from the pay-as-you-go system used by statutory health insurance.
Costs and services in a practice comparison
The cost of health insurance varies greatly depending on the system and individual circumstances. In the statutory health insurance system (GKV), an employee with a gross monthly salary of €3,500 pays around €598.50 at an average total contribution rate of 17.1% (14.6% general contribution rate plus 2.5% average additional contribution), of which the employee’s share is €299.25. For a self-employed person with a monthly profit of €5,000, the GKV contribution is around €855 (at 17.1%). In private health insurance (PKV), contributions for a healthy 35-year-old self-employed person may be around €450 per month, but they often offer more extensive benefits. The benefits of the GKV are defined by law and include basic cover, for example medical treatment, medicines and hospital stays. The PKV often offers additional, individually selectable benefits such as consultant treatment by the chief physician or alternative therapies. It is crucial to consider not only the cost, but also the scope of benefits and the long-term development of contributions. A cost comparison should always take personal circumstances into account. For families, the GKV can be cheaper because children are covered free of charge. The decision in favour of one system is therefore a very individual balancing act.
Mandatory insurance and possible additional cover
In Germany, health insurance is compulsory for all citizens who are resident in the country. This is intended to ensure that everyone has access to medical treatment in the event of illness and is not placed in an existentially precarious position by high costs. Those who are not insured must expect retrospective payment of contributions. Benefits under statutory health insurance are comprehensive, but they do not cover every need. In areas where statutory health insurance only provides basic benefits or where co-payments apply, private supplementary insurance can be worthwhile. Popular supplementary insurance policies include:
Dental supplementary insurance: Covers the cost of high-quality dentures, professional dental cleaning.
Hospital supplementary insurance: Allows for a single or double room, treatment by the chief physician.
Overseas health insurance: Covers treatment costs abroad, which are often not covered, or are only partially covered, by statutory health insurance.
Daily sickness benefit insurance: Covers loss of earnings during prolonged illness, particularly important for the self-employed.
These supplementary policies can close gaps in statutory health insurance cover and improve individual protection. The need for and scope of such supplementary insurance depends on personal needs and risk tolerance. A careful review of your own situation is therefore advisable.
Expert knowledge: legal framework and current developments
The legal foundations of health insurance are complex and are primarily anchored in Book Five of the Social Code (SGB V) for statutory health insurance (GKV) and in the Insurance Contract Act (VVG) for private health insurance (PKV). SGB V, for example, regulates the insurance obligation, the benefits catalogue of the GKV and the organisation of health insurance funds. For private health insurance, the General Terms and Conditions of Insurance (AVB) of the respective contract and specific provisions of the VVG, such as § 203 VVG on premium adjustments, are also relevant. Current court rulings continuously influence the rights and obligations of insured persons and insurers. For example, there are repeated decisions on the validity of premium adjustment clauses in private health insurance or on reimbursement of costs for new treatment methods. For instance, the Federal Court of Justice (BGH) has clarified that notification of the decisive reasons for a premium increase under § 203, paragraph five, VVG requires the specification of the actuarial basis whose change prompted the adjustment. Our expert tip: Stay informed regularly about changes in the legal position and relevant rulings so that you know your entitlements. In complex cases or disputes with your health insurer, professional advice, such as that offered by nextsure, can be very helpful. Knowledge of the legal framework is crucial for making an informed decision.
Some important statutory provisions include:
§ 5 SGB V: Insurance obligation in statutory health insurance.
§ 12 SGB V: Principle of efficiency for GKV benefits.
§ 193 VVG: Insurance obligation in private health insurance.
§ 203 VVG: Rules on premium adjustments in private health insurance.
§ 205 VVG: Right to terminate the contract when the obligation to take out statutory health insurance arises.
These provisions are only a small excerpt of the extensive statutory regulations. Understanding these fundamentals helps to better understand how the system works.
Choosing the right health insurance is an important decision with long-term implications. There is no single "best" health insurance for everyone, as individual needs and life circumstances vary greatly. For employees with an income below the annual earnings threshold, membership of statutory health insurance (GKV) is usually mandatory. Well-paid employees, self-employed people and civil servants often have the choice between voluntary GKV membership and private health insurance (PKV). Families with children often benefit from family cover in the GKV without additional contributions. Young, healthy single people with a high income could find lower premiums in PKV, with potentially more extensive benefits. It is advisable to consider not only current premiums, but also long-term premium trends, the scope of cover and flexibility when life circumstances change (e.g. starting a family, changing jobs, retirement). Comprehensive advice can help weigh up the pros and cons and make an informed decision. nextsure will be happy to help you design the health cover that is right for you. Bear in mind that supplementary insurance can also play a role in optimising your protection.
Your next step towards optimal insurance cover
Dealing with the topic of health insurance is an important step in safeguarding your health and financial stability. You now have an overview of the basics of statutory and private health insurance, their differences in costs and benefits, as well as the importance of compulsory insurance and possible supplementary cover. The complexity of the subject requires an individual assessment of your personal situation. To ensure that your insurance cover is ideally tailored to your needs and that you are neither underinsured nor overinsured, a professional analysis of your situation is recommended. Take the opportunity for personalised advice.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific recommendations for optimisation.
More useful links
Federal Statistical Office provides information on health insurance cover in the context of job quality.
Federal Statistical Office provides data on healthcare expenditure in Germany.
Federal Ministry of Health provides figures and facts on health insurance, including members and insured persons.
Federal Office for Social Security provides up-to-date figures and statistics on health insurance.
National Association of Statutory Health Insurance Funds provides key figures on statutory health insurance.
Association of Private Health Insurance publishes a statistical report on private health insurance (2023).
German Pension Insurance provides information on health and long-term care insurance for pensioners.
Gesundheitsinformation.de offers comprehensive information on health insurance in Germany.
Consumer Advice Centre provides useful information and advice on health insurance.
FAQ
What exactly is health insurance?
Health insurance is a protection system that covers or subsidises the costs of medical treatments, medicines, hospital stays and other healthcare services. In Germany, it is mandatory for almost all residents.
What types of health insurance are available in Germany?
There are mainly two systems: statutory health insurance (GKV), which covers the majority of the population, and private health insurance (PKV) for certain groups of people such as self-employed people, civil servants and higher earners.
How are health insurance contributions calculated?
In statutory health insurance (GKV), contributions are based on income as a percentage up to the contribution assessment ceiling. In private health insurance (PKV), contributions depend on the age at entry, state of health and the level of benefits selected.
Are the benefits the same in all health insurance policies?
No. The statutory health insurance (GKV) offers a legally defined catalogue of benefits that ensures comprehensive basic coverage. Private health insurance (PKV) allows for more individualised tariffs with often more extensive benefits that can go beyond the standard of the statutory health insurance (GKV).
What are supplementary insurance policies and when are they useful?
Supplementary insurance covers areas of cover that are not, or only partially, covered by statutory health insurance (e.g. dental prosthetics, a single room in hospital). They are worthwhile if you want protection beyond basic cover.
Can I change my health insurance?
A switch between different statutory health insurance funds is usually straightforward if notice periods are observed. A switch from statutory health insurance (GKV) to private health insurance (PKV), or vice versa, is subject to certain requirements and should be carefully considered.
