The equivalence principle
Private health insurance in Germany follows the equivalence principle.
This means that premiums are calculated based on:
- Entry age
- Health status
- Chosen coverage level
Unlike statutory insurance, income does not determine contributions.
Aging reserves
A central component of the private system is the creation of aging reserves (Altersrückstellungen).
Part of each premium is invested and accumulated during younger years.
These reserves are later used to stabilize premiums in older age.
This mechanism transforms private health insurance into a long-term capital-funded system.
Contractual benefit guarantees
Private health insurance operates on a contractual basis.
The medical services defined in the insurance contract remain binding.
Unlike statutory insurance, these benefits cannot simply be reduced through political reform.
This creates long-term planning stability for policyholders.
Individual tariff structure
Private insurance allows policyholders to select the structure of their coverage.
Common adjustable parameters include:
Deductible
€0 to €1,500 annually
Dental modules
Enhanced prosthetics & implants
Hospital
1/2-bed room + chief physician
Sick pay
Customized daily sickness allowance
This flexibility allows coverage to be tailored to individual needs.
Employer subsidy
Employees in Germany receive a statutory employer contribution toward private health insurance.
Employers must pay:
up to the maximum amount they would have paid in the statutory system.
This subsidy significantly reduces the effective cost of private insurance for employees.