Moving from private to public health insurance

[Conquistador 11,149]

Any time you are dishonest about something like this, you run the risk of some unpleasant financial consequences if you get caught. I assume Starshollow or another knowledgeable party can comment specifically on what they might be.

 

What are you going to do if the Kasse audits and asks you for proof of previous insurance with a GKV?

[swimmer 3,700]

 

They explained that I would pay more for the next 10 years by switching into GKV but thereafter, I would be paying lesser.

Are they psychic? How do they know what you will be doing at 50, earning, your state of health etc? Are they privy to long-term Krankenkasse budgets c 2030 (hint - it sure won't be any less than 15% when you retire).

 

Not being facetious, but it tends to be the people who only thing "least Eur" who shout loudest on this. There are also many other aspects to consider. A lot of my older German relatives stick with private because they can't stand being anywhere near public.

 

Also, perhaps you need to think about how much state support pensioners get if you are thinking that far ahead - my aforementioned family have half their premia paid.

[anaidross 179]

 

What are you going to do if the Kasse audits and asks you for proof of previous insurance with a GKV?

 

I have been free-lancing for about a year before joining a company as an employee. Before this free-lancing stint, I was always an employee. So by right, I am obliged to enter into the GKV.

 

The current employer only need me to provide a pay-slip on Feb 2007 to show that I was privately insured. If I provided this proof, they will classify me PKV.

 

No one ask me about this free-lancing stint and I learn about this need to switch only after a lot of checks in the net. For the audits, the company will provide the pay slip as proof if I were in PKV. If I want to get into GKV, I will either not provide the payslip or reveal to them that I was free-lancing for a while.

 

But I agree that it would entail some amount of risk...

 

As for Swimmer's comment,

 

You are right, there are so much "unknown"s, that is why it is so difficult to come to a decision by myself and their comments. They are giving their comments based on what they now see and know.

 

Personally, I am also a little doubtful about the state of the health insurance would stay the way it is in 10 years down the road, therefore I ask this question.

 

But if many of us here is of the view, even as it is today, it does not make sense, then I think the choice is quite easy for me.

[Conquistador 11,149]

 

I have been free-lancing for about a year before joining a company as an employee. Before this free-lancing stint, I was always an employee. So by right, I am obliged to enter into the GKV.

 

The current employer only need me to provide a pay-slip on Feb 2007 to show that I was privately insured. If I provided this proof, they will classify me PKV.

 

No one ask me about this free-lancing stint and I learn about this need to switch only after a lot of checks in the net. For the audits, the company will provide the pay slip as proof if I were in PKV. If I want to get into GKV, I will either not provide the payslip or reveal to them that I was free-lancing for a while.

 

But I agree that it would entail some amount of risk...

 

As for Swimmer's comment,

 

You are right, there are so much "unknown"s, that is why it is so difficult to come to a decision by myself and their comments. They are giving their comments based on what they now see and know.

 

Personally, I am also a little doubtful about the state of the health insurance would stay the way it is in 10 years down the road, therefore I ask this question.

 

But if many of us here is of the view, even as it is today, it does not make sense, then I think the choice is quite easy for me.

 

If I understood you correctly, you gave up the right to be publicly insured when you decided to go private back in 2001 because it was beneficial to you. You clearly have taken a job that pays over the statutory minimum to be privately insured, which AFAIK only gives you the right to be privately insured since you voluntarily opted out of the public system. If your salary were under the aforementioned statutory minimum for private insurance, you would be required to be GKV, which is how you can legally get back into the public system.

 

I don't see how you telling the employer that you were freelancing would help you get back into the public system since you were PKV during that time.

[anaidross 179]

 

I don't see how you telling the employer that you were freelancing would help you get back into the public system since you were PKV during that time.

 

According to Sozialgesetzbuch (SGB)(V) § 6 (9), it mentions, "(9) Arbeiter und Angestellte, die nicht die Voraussetzungen nach Absatz 1 Nr. 1 erfüllen und die am 2. Februar 2007 wegen Überschreitens der Jahresarbeitsentgeltgrenze bei einem privaten Krankenversicherungsunternehmen in einer substitutiven Krankenversicherung versichert waren oder die vor diesem Tag die Mitgliedschaft bei ihrer Krankenkasse gekündigt hatten, um in ein privates Krankenversicherungsunternehmen zu wechseln, bleiben versicherungsfrei, solange sie keinen anderen Tatbestand der Versicherungspflicht erfüllen."

 

http://bundesrecht.juris.de/sgb_5/__6.html

 

An employment status change from a free lancer to an employee, would be considered as "Tatbestand der Versicherungspflict erfüllen", i.e. must get back to GKV regardless how much one earns http://www.pkv.de/publikationen/pkv_publik/archiv/pkv_publik_nr_3_2009/gkv_schleppnetz/.

 

Please feel free to correct me, in case I am mistaken.

[Conquistador 11,149]

After reading those links, I would agree with your interpretation, but you should have mentioned the information in post 25 in your initial post.

[anaidross 179]

I thought it could be too much legal details that may not be relevant for me to decide whether to get back into GKV. Henceforth I did not mention them.

 

Basically my question is has anyone regretted getting into PKV as they have gotten older due to the excessive premiums that they are paying (relative to the pension income for instance).

[kato 3,519]

My father was pretty quick to get back into GKV asap when the PKV premiums for the family with two kids started topping 20% of his salary when he was 40. Back in the 80s. And he isn't regretting it in any way now that he's retired.

[Starshollow 5,984]

Anaidross:

There are two separate issues here that you raise:

1) legal situation concerning your new employment and health insurance: the GKV-WSG (the law which is behind the major health insurance reform) requires YOUR EMPLOYER upon taking up an employment with a gross salary over the legal threshold indeed to check if you are eligible to opt out from public health insurance or not. THE EMPLOYER is also the the person/institution to decide that and then keep whatever proof he thinks he has to show on what his decision was based in your personal files if the company is ever audited for that.

Now, one of the new main rules is that you need to show proof for the last three consecutive years that your GROSS SALARY was over the legal threshold. You mention that you worked for some time during the last three years as a freelancer/self-employed. It is my understanding (and experience from several years with this new rule now as a professional) that you thus fail to fulfill the requirements to opt out from public insurance already because you cannot show proof of a GROSS SALARY having been over the threshold, but only income - which is not the same by definition.

Having said that: if your employer is happy to run with just your income numbers, that is fine by any means and if he allows you to stay in private health insurance, it should not become any problem. Besides: the new gov. is planning to change that law back to the old ways where you could opt out from public insurance as soon as your salary is over the threshold for the first time - and then this stupid period of time with a stupid law will soon be forgotten entirely.

 

2) advantage or disadvantage of getting back into public health insurance.

I learnt from a few friends (older ones) or their parents (all Germans), if one is about 50 yo or so, that is when the premium paid for PKV and GKV would be the same. I am now 40 so would have another 10 or so years to reach this breakeven point.

Others have already commented on the incredible foresight (or rather lack thereof) of these friends and their parents. I take it that none of them have even remotely to do with finance in general and health insurances in particular in a professional way? Then I would be very wary to rely on such information if I was you.

Truth is: over the last two decades the increase in costs for public health insurance has risen more steeply than with any private health insurance.

AS an average the compound increase in costs for public health insurance from both, rises in monthly contributions and reduction of coverage, has been around 5% per year. I know of NO private health isnruance in Germany where that was or is the case.

The worst for someone in public health insurance is that without you having a say so about it, important parts of coverage can be reduced from one moment to the next by a simple act of legislation - which is not possible in private health insurance. The "friends" you were talking about are not only incorrect about feared increases in costs of private health insurance in old age (see more info about that below), they also forget to mention that they will not be able to afford serious dental work (replacements, inlays etc) if and when they become older because the coverage for that is now nearly zero in public health insurance. The costs, to be borne privately in that case and out of your retirment money, can easily surpass several thousand EUR, 20-30 grand to be spent on teeth to get you thru the next couple of decades are not unheard of. that is just one example...

 

Now back to the "private insurance becomes too expensive in old age" issue. One thing is true: public health insurance will go down in costs if your income goes down significantly during retirement because the premiums are based on income. However, if your income during retirement stays above (in current numbers) 3.750 EUR gross per month, you will still pay the same like now - because you remain in the highest bracket for public health insurance contributions.

 

The whole thing about people who cannot afford private health insurance when older is a bit part of modern “urban legends” in Germany – but based on things that happened in the past indeed. In the past (way past, btw) German private insurances where not obligated enough to take care of building up capital stocks for old age for their clients. This has changed dramatically in recent years. Now – in contrast to public health insurance where such mechanisms do not exist at all – 10% of your premiums are set aside for keeping premiums affordable in old age. And, if your insurance provider makes a poor job of investing properly and thus increases the premiums above average you can now legally take your entire capital stock with you to another insurance provider who offers better price/services (true only for contracts set up after Jan 2009). So, nowadays in effect the price stability for private insurance in old age is much better than public insurance where no capital stocks are built up for individuals but rather current income earners pay for all requiring public health insurance services. Looking at the demographic statistics the scenarios are clear and evident: either public health insurance will have to increase drastically across the board over the next decades or will – more likely politically speaking – further reduce coverage. Therefore nobody in his right mind and unless he has >3 or 4 family members without income to get co-insured in public health insurance for free, will join the public insurance.

Factor in to this the difference of what you would pay for public insurance in contrast to the private insurance of your choice: if your income is at an average over 3.600 EUR/month in Germany, you end up in the highest premium bracket for public health insurance which is currently around 678,58 EUR gross for you (including Pflegepflicht). If your employer picks up half the tab as is the law in Germany, your net costs would still be way over 300 EUR - as you describe correctly in your own contri above. If you set this side by side to your private insurance where you pay around 150 EUR net each month (leaving out the effect of deductible for now) as you mention you could invest the difference of nearly 150 EUR each month yourself into a pension or investment plan and be much better off in old age anyway – plus having more stable premiums due to the built up capital stock.

You (or the friends) are forgetting the compound interest in the next 20 years from saved premiums in private health insurance. If you use the difference the next 20-25 years and take the difference in costs between public and private health insurance as in your own example you would with around 150 EUR/month you'd have around 76k EUR accrued in saved capital until age 65 with a conservative performance of 4% p.a. From this capital you could spend for 20 Years (now based on even more conservative 3% interest p.a. continuing) around 300 EUR each month to pay for your health insurance and still have 40k EUR left when you turn 85 years of age. Of course if you simply spend all the saved money on booze, drugs and women.... - but then at least you have a great life!

 

Therefore, this “information” from others is not true anymore and has neglected positive developments in favour of going private in the last 10 years or so. Problem is that there are not even many qualified advisors out there who can explain this properly...and certainly no laymen.

 

If I had to look intom my little chrystal ball to give a forecast like your friends, I would see this and say accordingly:

the public health insurance system in the current setting has become so unsustainable that within the next 20 years the whole system as it is in Gemany will have to be abandoned. In order to let a public insurance system survive in some way, all residents in Germany regardless of income will have to become compulsory members of public insurance. And since even then the coverage will not be kept at the current level in public insurance anymore, everyone with a dime to his name will have to buy private supplementary insurance on top of the public one. If you have voluntarily paid into the public system until then and forgone the potential savings you could have had in the past, you will find yourself to have been screwed by the system pretty badly... but that is just my little chrystal ball, I could be wrong

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

[john g. 30,327]

Magnificent post,Starshollow!!!

I am a professional independent insurance broker and authorised advertiser. Contact me.

[anaidross 179]

So no one has a view that is pro-GKV?... :)

[KaiserWilly 72]

So if you don't earn €4050 gross a month you're stuck with GKV, right?

[john g. 30,327]

Anai:I´m pro-GKV when I compare it to the way at least 80% of the world population are insured (or not!).I´m pro-GKV for single breadwinner with non-working spouse and a couple of dwarfs at home.I´m pro-GKV ideologically and humanely.However, we live in an amazingly complicated country as far as this issue is concerned and it´s what we have.For some people (committed singles, committed Dinkies etc)-private is great!Don´t see why Beamte get so many privileges with their private health insurance but I didn´t invent the system.Don´t know why soldiers are mostly privately insured...again,I didn´t invent the system...don´t like it that many foreigners coming over to work freelance here can´t get into the public system even if they want to....I personally would prefer a simplified public with top-up options and that may come one day.Bet I´ll be long dead b y then,though!!

I am a professional independent insurance broker and authorised advertiser. Contact me.

[anaidross 179]

 

So if you don't earn €4050 gross a month you're stuck with GKV, right?

 

It seems that for FY2010, the bar has been further raised.

 

http://www.pkv-private-krankenversicherung.net/jahresarbeitsentgeltgrenze-und-beitragsbemessungsgrenze-2010-888

[Starshollow 5,984]

Kaiser willy: as mentioned above, you have now have to show that your current gross salary in 2010 exceeds 4.162,50 EUR per month or 49.950 per year. PLUS: you must also show proof that your gross salary in the preceding three years either within or outside Germany also exceeded the legal thresholds relevant for those years.

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

[KaiserWilly 72]

Well thankyou both for the info. So no PKV for me for a while then...

[Starshollow 5,984]

Hope is on the way. Kaiser WIlly! The new governement proposed to change back to the old rules during this year. Initially the plan was for legal changes to become effective this summer, now I have heard it might get delayed til winter time. But if and when that change comes you will be able to siwtch public to private again when your current salary exceeds the threshold for the first time.

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

[anaidross 179]

Is this really confirmed concerning getting back to the old rules?

[lazybum 63]

...and might the ban on foreign providers be got rid of??

[Starshollow 5,984]

wait a minute while I polish my chrystal ball a bit...

 

The issue with getting back to the old rules is part of the coalition treaty between CDU/CSU on one hand and FDP on the other as base for our new federal governement. At page 86 of this contract it says:

 

 

Ein Wechsel in die private Krankenversicherung wird zukünftig wieder nach einmaligem

Überschreiten der Jahresarbeitsentgeltgrenze möglich sein.

So, yes, the plan is there - but I heard that after the desaster with the reduced VAT for hotels and the funds raised before from large hotel owners the FDP is a bit afright to push this issue which could be seen as yet another lobbying for an industry which pays a lot of money to both FDP and CDU/CSU (both from insurance companies and financial sales companies). Therefore, while it looked like it would come for sure in the summer, it seems now to have been pushed on the backburner and hopes are, that it'll come in the winter at the latest.

 

Re-allowing international health isnruances: unless someone takes this up to German and EU courts (because I believe that it could violate some EU laws and regulations, thought I am not entirely sure of how much rights the individual memberstates actually have in setting their own rules and laws about health insurance) there won't be any change towards that. I think the lid was closed for international healht insurance at the latest last summer when the German supreme court ruled that the particular part of the new health insurance law which requires German private health insurances to offer a so called BASIS tariff which mirrors the public coverage and where they must accept anyone in, regardless of age, gender or medical condition if he/she can't get into public insurance basically pushes all international insurances out of the German market as failing to comply with this. None of them will even think about offering such a BASIS insurance tariff - but it is also not an artificial market barrier because everyone who want to offer health insurance in Germany simply has to obey by this rule. it is your decision as an insurance company if you want to or not. I can only see some leeway for insurances for expats with a timelimited residence permit (which rules out all EU citizen). But even there I am a bit sceptical. So, no, I don't think that is gonna change anytime soon. Plus: the noose tightens on people still in Germany with these insurances, now that the tax law also compolicated things. At one point in the future some federal authorites will clamp down on all people who have not bothered to sign up with insurances fulfilling the legal requirements and those back-charges will then really hurt some folks seriously.

 

Cheeri

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.