There is news for German expats in 2021, but it is not necessarily good news. The German government has announced the new health insurance contribution thresholds with effect from January 2021.
As expected, the contribution ceilings have gone up – not a good thing for high-earners, because it means you will end up paying more if you belong to the so-called high-income receivers.
Health insurance cost to be increased for high-earners from 2021
As a result of the yearly adjustment of the social contribution threshold, from January 1, 2021, the income threshold for statutory health insurance (gesetzliche Krankenversicherung) and long-term care insurance (Pflegeversicherung) will increase to €58.050 euros per year (€4.837,50 euros per month from €4.687,50 in 2020 ), up by €150 per month compared to 2020.
On top of that, the annual compulsory insurance limit (Versicherungspflichtgrenze) has been increased. In 2020, the annual compulsory insurance limit is €62.550 gross, which corresponds to a monthly income of €5.212,50. In 2021 it will increase to €64.350 gross per year or €5.362,50 gross per month. The compulsory insurance limit plays an important role if you are employed subject to social insurance and wish to switch to private health insurance. Only when your annual income is above the above limit, you will be allowed to be privately insured. Simply put, you might opt for private insurance only if your monthly income is above the limit, which is €5.362,50 gross per month in 2021.
Time to rethink your German health insurance strategies?
These yearly adjustment is obviously a burden for high-earners. If your income level is above the compulsory insurance limit, it is probably worthwhile to rethink a new insurance strategies to save your insurance costs, which is significantly portion of statutory contribution.
There are increasing number of health insurance solutions offered to high-earners, freelancers, and expats living in Germany. Low cost health insurance options and Fintech health insurance apps have been in the trend.
Ottonova is an Insurtech startup serving young, tech-savvy English-speaking expats living in Germany with their fully-digital health insurance solutions. The startup wishes to make German health insurance simple. The complexities of the German health insurance system could give any expat headaches, especially newcomers and those that do not speak the language. Ottonova is backed by one of German largest private health insurance- Debeka. The product is fully-digital with all transactions that can be made in the app. The Ottonova app is available in English. The digital insurance solutions such as Ottonova could be good strategies for high-earning expats living in Germany who want cost-effective, simple, digital, expat-friendly health insurance solutions that save them money and sleepless nights.