Germany’s health insurance is a far more complicated ordeal as it might seem — especially to foreigners. Often, Germany is used as an example of how countries should implement health insurance, and it looks great from the outside. Every one is insured, and that is all which is looked at. Yes, this is super important, and I am happy to live in a country where everyone has health insurance. Still, the public system where 88,1 % (source) of the population are insured is quite limited in freedom, flexibility, customization. It also is expensive (relative to income) for people who earn well but do not make the truly big bucks.

To set the stage, let’s first define what we will not be talking about:

• This article will not explain how the systems work. Others describe this much better than I ever could.
• It does not provide details about specific insurers or insurance policies. Heck, you won’t even find a single insurer or insurance name as any recommendation or critique would be senseless without knowing the specific case.
• This story is not a comprehensive guide about private health insurance but rather summarizes a small subset of what I have learned while researching: I spoke with insurance brokers and insurers for hours on end, did my fair bit of online research, and spoke with friends young and old who gave me advice and hinted at pitfalls. I am not to repeat the obvious but rather provide information that surprised me and may not be well known.

That said, there is no guarantee for correctness (though please inform me if you see any misinformation), and you should get expert advice (aka. not from me). I do, however, think that this is relatively unbiased. Initially, I thought I would not go for private health insurance as the industry’s image is rather bad, but a couple of months later, I decided on it for rational reasons.

Let’s Talk Money

Money should not be the primary driver of switching to private health insurance. Nonetheless, this is what gets most people’s interest at first as public health insurance becomes pretty expensive as it is a certain percentage of your income until it is capped at currently 58.050 Euro/year income (source). Especially being self-employed and earning well (above 4687,50 Euro/month), the costs are 916,70 Euro/month (personal example containing sick-pay and the 1,3% ‘Zusatzbeitrag’ that almost every insurer charges; source). In the past five years, I’ve been to the doctor less than five times resulting in 10.000 EUR per visit (terrible calculation — I know!), which was a motivational cause to look into it for me.

One common critique is that private health insurers seemingly can raise the prices at will. This is not the case as BaFin regulates them, but I won’t get into the nitty-gritty details and try to show it all in one graph: This graph shows the price development of public vs. private health insurance.

The problem is that even though public health insurance is set to a specific rate and insurers can only slightly variate, the price development tells a different story. Privately insured customers complain about 5–10% raises that come every couple of years. You can’t do anything against it (except for switching to a different private insurance, which may not be a real option if you have had health issues). On the other side, with public health insurance, the contribution assessment ceiling (dt. Beitragsbemessungsgrenze) and percentage (dt. Beitragssatz) are increased yearly, showing an even stronger development.

The big problem arises when old age hits and you are stuck with an expensive health insurance provider. Why is it expensive? Firstly, prices may have increased from time to time, making it significantly more costly than when you initially purchased it. Secondly, public health insurance becomes reasonably cheap when you are in retirement as you probably have significantly less income, thus reducing the insurance rate. Private health insurers offer products to hedge against this: Pay more now, pay less later. For me, however, the likelihood of changing insurances or moving out of Germany is so high that I simply am adding a little money to my long-term investments, which will go for the more expensive health insurance the road down.

Prices for private health insurance range significantly from about 250 to 650 Euros (for a 25-year-old) based on provider, benefit options, and deductibles. You can use Check24 to estimate the cost for your age on the supposition that you have no preexisting conditions.

Advantages

On average, citizens with private health insurance live four years longer than their public counterparts (Statista source (paid), source). This headline went through the news a couple of years ago, and although it technically is not incorrect, there is definitely less causation than correlation here. But to be honest, I rather be in a pool with these people than with the average citizen.

Getting Control Back

Personally, I am a big fan of decision freedom. For example, in the private health system, I can decide what kind of doctor I want to treat me in an emergency, what I want to insure and what I don’t (e.g., teeth), which luxuries I think would be great (e.g., directly going to the specialty doctor instead always first going to the general doctor), how much I want to pay and what kind of procedure I want to do without my health insurance necessarily chiming in.

One unexpected advantage my insurance broker told me about is that it technically — and I am not trying to get you to be dishonest — possible to ‘hide’ issues you are having as the insurance will never know they happened. They don’t know what happened because there is no automatic system for doctors to inform the health provider. As long as I pay for something out of pocket, there is no centralized history of me needing it. As I am basically incapable of lying, I do not think I will use this myself; the implications are still interesting. Thinking about data privacy, it becomes evident that there is no central repository of my health history and who knows if or when this becomes useful. Still, I do like the idea and control I have.

Supporting your Doctors

Sure, maybe just something to feel good about yourself, but you support your doctor significantly more. According to the study summarized and referenced here, on average, doctors charge 2,28 times as much for the same procedure compared to public-insured customers. Think of the hero you would be in your favorite restaurant if you always tipped 128 percent on your meal. They would treat you like a king. The controversy is evident, and if you ask me if this is good and fair, I would say “no, absolutely not.” However, having this system in place, I am helping no one by staying in the public health insurance. Hence, I try to optimize my positioning in the policy framework I live in, thus seeing this as an advantage. So yes, I rather be the king when it comes to my health. What fascinates me is that private health insurance still mostly is significantly cheaper compared to its public counterpart, even though doctors charge more.

Disadvantages

Not all is good, though, and there are some objective downsides as well as some drawbacks that I have heard about from different people.

Kids

Yep, as any public system should, having children is incentivized in German public health insurance by making the cost 0.00 Euros for kids. Now, it does not get much cheaper than that.

However, most private health insurances also have significantly cheaper rates for children costing you between 100 and 200 Euros per child per month. Considering that you are likely to save about 400 Euros per month the break-even point is about two children. One can luck out if one parent is in the public insurance as the children can then also be insured for free with said parent.

Past complications

Having had health-related issues in the past will significantly increase the price for you or even result in you not getting any offers. These health insurance providers are aiming to minimize their risk of having sick and expensive clients.

In my opinion, these additional costs can be excessive, for example, for my minor personal issue: A couple of years ago, I thought it would be an excellent challenge to walk 100km by foot within 24 hours as part of a Mammutmarsch event. Good news first: I completed the 100km in 23:42. Bad news: The over-stressing of my feet caused a heel spur to be inflamed. I went to the podiatrist a couple of times, got insoles, and after a couple of months, the inflammation went away. Since then, I have run a marathon and done a triathlon without any pain. However, all private insurers wanted a surcharge of 35 to 70 Euros per month. Ugh, annoying!

More Work

The public system has done very well to make going to the doctor/hospital a near-frictionless experience — at least on the financial side. You insert your insurance card into the machine once, and for the next three months, there is zero bureaucratic effort for you. On the private side, you not only need to fill out a form for every doctor you go to, but you also get the invoices sent to you and then must pay them from your own bank account. Most insurers provide apps to scan the invoice and then quickly transfer the money (ideally before the payment due date), but this, nonetheless, is a pain. If your insurance has a deductible, you need to figure out when it is better to use the insurance and also keep all documents filed away in the case that you decide you want to use the insurance.

For expensive hospital visits, processes exist for the insurance to directly pay the invoices, but this, too, is not as trivial as in the public system.

Bad Image and Regulatory Oversight

The primary reason why I was very hesitant to even look at private health insurers was due to the overall bad image. “Insurers can do whatever they want, and you are locked in once joining,” was the general tenor. However, a lot has changed in both 2009 and 2013 on the regulatory side, forcing all insurers to create new tariff plans. In addition to restricting flexibility, all insurers are under the oversight of Germany’s Federal Financial Supervisory Authority (BaFin). These changes, for example, ensure that the prices of a contract cannot be increased arbitrarily but only under specific conditions and approval. This gives me the trust that I will not be completely screwed over when I become older.

Additionally, the new regulatory oversight levels the different insurers and standardizes much. For example, one crucial aspect for me is the possibility to get out of the insurance contract before the 24-month minimum contract duration if I move outside of Germany. All insurers guarantee this possibility as they must adhere to the regulation.

Lock-In Effect

Private insurance lock-in is by far the most well-known disadvantage: Once you are in the private system, you can’t switch back. However, as long as you are not yet 55 years old and earn less than the income threshold, you are able to switch back (source). My hedge is planning to allow myself some sabbatical time or to start/join a young company and pay myself only a low salary for more equity. Another way out is living aboard, which resets everything.

Insurance Advisors

Although, in general, I am a fan of figuring everything out on my own and engaging with companies without any intermediaries, I was delighted to have found an insurance advisor who introduced me to the whole topic and helped me through the journey. Additionally, I found the anonymous risk-analysis and better connections to be surprisingly positive advantages.

Types of Advisors

In general, there are three types of advisories:

1. Advisors from specific insurance companies or advisors who only work with a single or few companies: These advisors can only sell a small part of all products and are not neutral, making them a lousy choice, in my opinion.
2. Advisors taking an honorarium: Paying an upfront fee gets you purely advisory with someone who does not profit from you signing any papers — less of a salesperson and more of an advisor.
3. Advisors taking provision are not genuinely independent but still very interested that you buy something. Personally, I have no problem saying no if I don’t find the perfect product, but if you get easily pressured into something, this may not be good for you. I like to ask questions about really cheap products and see how they react. Would they be fine with me getting the most inexpensive insurance having a low provision, or do they try to talk me up to expensive products?

Anonymous Risk Analysis

When applying for private health insurance, you must truthfully tell the insurance about your past. Some insurances ask if you have ever been rejected by another insurance, thus reducing your likelihood of offering insurance. It helps a lot to have a risk analysis performed anonymously as rejection does not affect future applications. This also allows you to know exactly how much you will be paying without giving any personal information. As far as I know, this option is not available to ordinary customers.

Better Connections and Service

Good advisors have direct access to qualified personnel within the insurance companies and must not wait in the waiting queue as you and I would need to. As your insurance advisor has incentives to keep you happy, they (hopefully) will take your requests and process them more efficiently compared to you doing it on your own. This surely is no problem when an insurer wants to win you over as a customer, but this is likely to happen throughout your patronage with the insurer.

Conclusion

I know that the private system is more complicated than the public one. Receiving invoices, paying them yourself, scanning receipts, talking with the insurance to ensure they will cover your treatment, keeping track of if you should submit receipts or not, and so on. However, if you are running your own business or earning enough to join private health insurance, you probably will manage the complexities of insurance ;)

I like the flexibility, I like having choices, I think having better protection may come into play at some point, and I feel my hedges to get out protect me from becoming locked-in are solid. Especially if you are also self-employed, I recommend you to at least look at the available options but no harm in staying in the public system either.

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