Pension and Private Health Insurance: Optimise Costs, Leverage Benefits
14 May 2025
8
Minutes
Katrin Straub
CEO at nextsure
Many pensioners with private health insurance worry about increasing premiums as they age. However, there are numerous ways to reduce the costs of your private health insurance in retirement and to optimally adjust your coverage. Find out here how you can take advantage of subsidies, optimize tariffs, and apply tax benefits.
The topic in brief and concise terms
Privately insured pensioners can receive a subsidy for health insurance from the pension insurance, which must be applied for.
An internal tariff change according to § 204 VVG is an effective way to reduce private health insurance contributions in old age without losing age reserves.
Contributions towards the basic coverage of private health and long-term care insurance are tax-deductible as precautionary expenses.
Understanding the contribution levels in private health insurance for pensioners
The contributions to private health insurance (PKV) are generally independent of income in retirement. Unlike statutory health insurance (GKV), the amount of your pension income does not play a direct role in the calculation of contributions. Many pensioners benefit from the fact that certain contribution portions cease: From the age of 60, the statutory surcharge of ten percent is no longer applicable. Additionally, upon retirement, the necessity for health insurance benefits due to incapacity for work usually ends, which further reduces the premium. In 2023, the average PKV contribution for adults without entitlement to benefits was 535 euros per month. It is important to analyze your own contribution situation early on. These factors significantly influence your future costs.
Secure a subsidy for private health insurance from the pension insurance
As a privately insured pensioner, you are entitled to a subsidy for your health insurance contributions from the statutory pension insurance. This subsidy must be actively applied for, ideally directly with the pension application. The amount of the subsidy is based on the general contribution rate of the statutory health insurance (currently 14.6 percent) and the average additional contribution rate of the health insurance funds. Private health insurance policyholders currently receive 8.55 percent of their gross pension as a subsidy (half of 14.6 percent plus half of 1.7 percent average additional contribution, as of 2024, may vary slightly depending on the source, here 1.25% used in the source, resulting in 8.55%). However, the subsidy is capped at half of your actual private health insurance contributions. For a pension of, for example, 1,000 euros gross, you could receive up to 85.50 euros in subsidies. Please note that no subsidy is paid for contributions to private long-term care insurance. The health insurance for pensioners provides further details here.
Actively reduce contributions: Explore tariff changes and other options
There are several ways to optimize your private health insurance premiums in retirement. A highly effective method is changing your plan within your insurance company according to § 204 of the Insurance Contract Act (VVG). This right guarantees you the ability to switch to a more affordable plan with comparable benefits while taking into account your accumulated age reserves. Often, a savings of up to 43 percent is possible.
Additional options for reducing premiums include:
Reviewing and possibly increasing the deductible.
Switching to annual payment of premiums, which often comes with a discount of three to five percent.
Switching to the standard or basic tariff, if the prerequisites are met and this represents the suitable solution. The standard tariff is available to policyholders who joined private health insurance before 2009, have been insured there for at least ten years, and meet certain age or income limits.
Utilizing premium relief tariffs, if they were concluded early.
Many policyholders are unaware of their right to an internal tariff switch according to § 204 VVG and therefore pay unnecessarily high premiums. A consultation can reveal individual savings potential here. The costs of private health insurance can thus be actively managed.
Tax benefits: Deducting contributions to private health insurance
Contributions to private health and nursing care insurance can be claimed as deductible expenses for tax purposes. Deductible amounts include contributions serving basic coverage, encompassing services at the level of statutory health insurance. Your insurer will inform you annually of the amount of deductible contributions, which you should enter in the 'Vorsorgeaufwand' section of your tax return. For employees and pensioners, the maximum amount for deductible expenses is 1,900 euros per year; for self-employed individuals, it is 2,800 euros. These amounts double for couples taxed jointly. The correct entry in your tax return can significantly reduce your tax burden. Also, inform yourself about the tax deductibility for pensioners in detail. Any reimbursement of contributions received must also be included in the tax return, as they reduce the deductible special expenses.
Switching to statutory health insurance: An option for few pensioners
Switching from private health insurance back to statutory health insurance (GKV) is only possible for retirees under very strict conditions. Generally, a change is severely restricted from the age of 55 onwards. An important prerequisite for joining the health insurance scheme for retirees (KVdR) is that you were legally insured for at least nine-tenths of the time in the second half of your working life. Since a legislative amendment in 2017, a flat rate of three years of insurance time in the GKV is credited per child, which can increase the chances for switching. Another possibility can be family health insurance through your spouse, provided their income limits are not exceeded (maximum total monthly income of 505 euros or 538 euros with a mini-job as of 2024). A change should be carefully considered, as returning to private health insurance is often not possible later, and the GKV can also have cost traps in old age, such as voluntary insurance. The compulsory health insurance for private pensions is a complex topic.
Expert Depth: Legal Basics and Design Tips for Your Private Health Insurance in Retirement
For privately insured pensioners, certain paragraphs and regulations are of particular importance. The aforementioned § 204 VVG is the key tool for premium optimisation through an internal tariff change. It guarantees you the right to switch to another tariff of the same insurer without a renewed health examination and with the retention of all ageing reserves, provided the new tariff does not include additional benefits. If there are additional benefits, a health examination may be required for them. Another important aspect is the formation of ageing reserves during the contract term. These are intended to cushion the rising health costs in old age. From the age of 60, the statutory surcharge of ten percent, which was used to build up these reserves, ceases to apply, leading to a direct reduction in premiums. Our expert tip: Have your contract situation reviewed by an independent specialist at least every three to five years. Often there are newer tariffs with a better price-performance ratio, or your needs may have changed. A private health insurance should remain flexible. Also, pay attention to the rules for premium adjustment in your insurance conditions. These must be transparent and understandable.
Proactive Planning: Ensure Long-Term Contribution Stability
To keep your private health insurance premiums stable and affordable in retirement, forward planning is essential. You can set the course already when you're younger. Taking out a premium relief plan (BEA) is one option to receive a fixed contribution to the premium from an agreed age, for example, 67 years. These plans are state-supported. Another strategy is to consciously choose a plan with sufficiently high age reserves from the start. The earlier you start planning for stable premiums in old age, the lower the monthly burden. Also consider which benefits are truly important to you in retirement and whether a plan with a higher deductible might be appropriate to reduce ongoing premiums. The combination of a private pension insurance and optimised health insurance forms a strong foundation for retirement.
Frequently asked questions about pensions and private health insurance answered expertly
More useful links
Destatis offers information on health insurance coverage in Germany from a statistical perspective.
The Federal Ministry of Health provides comprehensive details about private health insurance.
The German Pension Insurance provides details on health and nursing care insurance for pensioners.
The PKV Data Portal of the Association of Private Health Insurance offers current data and statistics on private health insurance.
Stiftung Warentest offers an article on affordable health insurance options for pensioners.
Wikipedia provides a comprehensive overview of private health insurance in Germany.
A press release from the German Pension Insurance explains subsidies for health insurance.
The Federal Ministry of Health clarifies terms and contributions in private health insurance.
The GDV (German Insurance Association) provides statistics and data on private health insurance for 2024.
FAQ
How will my private health insurance contributions develop in retirement?
In retirement age, the statutory surcharge of ten percent and contributions for daily sickness allowance often cease, which can lead to a reduction. The German Pension Insurance also pays a subsidy. However, premium increases due to rising healthcare costs are still possible. An internal tariff switch (§ 204 VVG) can help optimize costs.
What options do I have to reduce my private health insurance contributions as a pensioner?
The main options are the pension insurance subsidy, an internal tariff change according to § 204 VVG, the adjustment of the deductible, the use of contribution relief tariffs, or switching to standard/basic tariffs under certain conditions.
Do I also have to pay health insurance contributions on my private pension?
For benefits from a purely private pension insurance (third tier of retirement provision), there are generally no direct health insurance contributions if you are insured with private health insurance (PHI). The contributions to PHI themselves are independent of income. It's different for company pensions or certain forms of Riester pensions if you were insured under statutory health insurance.
What is § 204 VVG and how does it help me as a retiree?
§ 204 of the Insurance Contract Act (VVG) grants you the right to switch to a different tariff with equivalent insurance coverage within your private health insurance. Your acquired rights and age reserves remain intact. This is often a very good way to save on premiums in later life without having to change insurers.
Will I lose my insurance cover if I can no longer pay my private health insurance premiums in old age?
No, you will not lose your insurance coverage. If you can no longer pay the contributions, you will be changed to the emergency tariff. This provides a limited range of benefits at a lower contribution. If you receive social assistance or basic security, the state may cover the contributions, often at the basic tariff.
Is a contribution-reduction tariff worth it for retirement?
A contribution relief tariff can be useful for making private health insurance premiums more manageable in retirement. During the savings phase, you pay an additional contribution, which then reduces your regular premiums in old age. Whether such a tariff is worthwhile depends on your individual situation, the timing of the contract, and the conditions of the tariff. Early consultation is advisable here.
