Obligatory German health insurance

I know there have been similar posts before, but I can't find any that answer my specific question. I've been working in Germany for nearly a year now (started November 2004). When I arrived, the company's lawyers tried to force me to sign up with a private Krankenkasse at the cost of several hundred euros per month. When I pointed out that AXA PPP in England could arrange comprehensive expat insurance for around £50/month, they grudgingly admitted that this was an option they'd overlooked, and said that as I was earning over the threshold amount I could take out AXA insurance and pay nothing into the German Krankenkasse system. "Hooray", I thought.

This all worked very well until recently, when they called me to ask how long I was staying in Germany for. When I told them that my contract was permanent and that I had no particular plans to leave, they said that I would have to register with the German system in November 2005. They did say, however, that I could register with the "cheap" (i.e. state) Krankenkasse and continue with my British insurance, but this would still cost around 16% of my gross salary, split between me and my employer. I really don't trust the company lawyers, as they seem to have their own agenda.

So, my question is this - as an expat with comprehensive AXA expat insurance and a salary in excess of €50k, can I not continue to avoid paying into a Krankenkasse? I am currently repaying a student loan and a startup loan, and really can't afford to lose a further 8% of my salary.

did they say why you had to start doing this? if you earn more than €4,2 or something gross a month, then you can pay into the private insurance anyhow. less expensive than gov't insurance.

Well, they explained it rather badly and didn't seem to really know the answer themselves. As far as I understand it:

1) As I was earning over the then threshold level of around €45k, I was eligible to avoid the obligatory payment into the state Krankenkasse. This gave me the option of going for a Privatkasse, though this would have been much more expensive.
2) This exemption enabled me to take out British insurance, so long as it was fully comprehensive and valid in Germany. AXA PPP's comprehensive expat insurance scheme fulfilled these requirements - I sent my insurance documents to the lawyers and they said that everything was fine. I have therefore never paid into the German insurance system.
3) My lawyers then spoke to my boss and found out that I was on a permanent contract (they claim to have been under the impression that I was only here for a year, even though I'd never told them that). They then decided that exemption from paying into the German system was only valid for one year, or for the entire term of a limited contract.
4) As my contract is permanent, they said that once the year's exemption was up (i.e. November 2005), I would have to pay into a German Krankenkasse, regardless of whether I continued with my British insurance.
5) They did say, however, that a state Krankenkasse would be much cheaper, so I could pay the statutory minimum into that (rather than pay a premium for a Privatkasse) and continue with my expat insurance (which I want to do, as I've been with AXA for 10 years and they're really good and their policy includes things like repatriation to the UK if I'm really ill). I know, though, that a state Krankenkasse would cost about 16% of my gross income, and I thought (though I may be wrong) that a private one would be more expensive still.

I thought that my salary was over the threshold level and that I could therefore do what I liked with my insurance as long as I had it, but it seems that the German Government wants more money from me. What I don't get is this year's exemption thing - surely I'm either exempt or I'm not? Seems odd to put an arbitrary time limit on it.

Its not the German Government that wants your Krankenkasse money, its the Kasses. If you earn more than 3 500 (I think) a month, then you can opt into Private- much cheaper than state insurance that covers so little anyways. You can speak with an Agent- Showem recommended me a great one, and he will look at your needs, what you want to spend, and then print you out the best options for you, you pick one, and sign up. I would do this before Dec, as January is a new year (yeah, obviously!) and the prices all go up for new people, but if you are in the system already, the rate of increase is less. I was on State insurance, then opted to Private- and save myself over 100 Euro a month (plus 100 from my bosses). So, that is something to think about.

Hum. But I definitely have to sign up with a German Kasse? Anyone have more info on this 1-year exemption thing? I'm wondering whether I could get my policy transferred from AXA UK to AXA Germany, thereby avoiding all the hassle of setting up a new policy and (hopefully) getting a lower premium based on my 10-year, virtually claim-free history with them...