This article was translated from the original human-written German version. While we strive for accuracy, we cannot guarantee it is error-free. We recommend consulting the German original for the most precise information. This content is for informational purposes only and does not constitute financial or legal advice. Always consult with a qualified professional before making insurance or financial decisions.
What Does Private Health Insurance (PKV) Cost in Old Age?
Is PKV unaffordable in old age? This guide analyzes the actual premium development in private health insurance during retirement, compares it with statutory health insurance (GKV), and explains mechanisms for premium stabilization.
The article illuminates:
The mechanisms of PKV premium calculation.
The built-in safeguards for premium stabilization in old age.
A direct comparison with cost development in the GKV.
Fundamentals of Premium Calculation
To understand the costs of PKV in old age, it is crucial to know the basic principles of premium calculation. The PKV is based on the funded system. This means that each insured person uses their own contributions to provide for their expected rising healthcare costs in old age. A significant portion of the premium is used from the outset to build up so-called age reserves.
In contrast, the Statutory Health Insurance (GKV) operates on a pay-as-you-go system. Here, the young and healthy premium payers directly finance the benefits for those who are currently sick and elderly. No age reserves are built up to provide for demographic changes. The increasing life expectancy and medical-technical progress influence premium rates in both systems.
Premiums in the PKV depend primarily on the chosen tariff, the age at entry, and the health status at the time of contract conclusion. This differs from the GKV, where premiums are income-dependent up to the contribution assessment ceiling – also on rental, interest, and lease income for those voluntarily insured in the GKV.
Mechanisms for Premium Stabilization in Old Age
The PKV offers various approaches to mitigate premium increases, stabilize premiums in old age, or even reduce them.
Age Reserves: The central mechanism is the formation of age reserves. These interest-bearing accumulated funds are used to offset the predictable increase in healthcare costs in old age and prevent premium increases that are solely due to the insured person getting older.
Statutory Surcharge: Since 2000, a statutory surcharge of 10% has been included in the premiums for full health cost insurance. This surcharge is paid in addition to the premium from age 21 to 60 and serves as a provision for medical progress. This surcharge is waived upon reaching the age of 60 and is used from the age of 65 to cushion premium adjustments.
Waiver of Daily Sickness Allowance: Upon reaching retirement age, the premium for the daily sickness allowance is waived. This leads to a further reduction in monthly costs.
Premium Reduction Tariffs (BEK/MBZ.flex): Many insurers offer special tariffs that allow policyholders to save additional premiums even at a young age to reduce the monthly burden in old age. These contributions can be flexibly used from a certain age (e.g., 63 or 67) for guaranteed premium reduction. The premium for such reduction tariffs is fully tax-deductible and may be eligible for employer contributions.
Tariff Change Options: The right to change tariffs according to § 204 of the German Insurance Contract Act (VVG) allows insured individuals to change tariffs within their company without losing their accumulated age reserves. This offers flexibility and the opportunity to adapt insurance coverage and thus premiums to changing life circumstances.
Subsidy from Pension Insurance: In retirement, PKV insured individuals receive a subsidy for their health insurance premiums from the German Pension Insurance (GRV). This subsidy amounts to 8.1% of the statutory gross pension (potentially limited to half the net amount of the PKV premium).
Basic Tariff: As a social safety net for those in need, the PKV offers the basic tariff, which provides comprehensive insurance coverage equivalent to the benefit level of the GKV. The premium in the basic tariff is legally limited to the GKV's maximum contribution. In cases of need (e.g., eligibility for social benefits), the premium can be halved, and the social welfare office then covers the other half. If necessary, the premium can even be reduced to zero.
Comparison of Premium Development: PKV and GKV
Regarding Private Health Insurance (PKV): Premium adjustments in the PKV are legally regulated. Reasons for adjustments include general developments such as rising treatment costs, increased life expectancy, or changes in interest rates. Individual aging or new illnesses after contract conclusion do not lead to a direct premium adjustment for the individual insured person.
Regarding Statutory Health Insurance (GKV): In the GKV, the premium amount is linked to income (up to the contribution assessment ceiling). As the ceiling and premium rates are regularly adjusted to cover general cost increases in healthcare, the possible maximum premium also increases. For the year 2025, this will be around €1,174 per month.
Another important aspect in old age is that in the GKV, in addition to the pension, other income sources such as occupational pensions, capital benefits from direct insurance, income from self-employment, as well as rental, interest, and lease income can be subject to contributions. In the PKV, pension income and other benefit entitlements do not play a role in premium assessment; only the chosen scope of insurance is decisive.
Tax Deductibility
Since the Bürgerentlastungsgesetz (Civil Relief Act) of January 1, 2010, contributions to mandatory health and long-term care insurance can be deducted from taxes to a significantly greater extent. Contributions to basic health insurance and mandatory long-term care insurance are deductible without limit, including any risk surcharges and the statutory surcharge.
Recommendations for Premium Planning in Old Age
To optimize PKV costs in old age and proactively influence premium development, you can pursue various strategies:
Early Enrollment and High Age Reserves: The younger and healthier you are when entering the PKV, the lower your starting premium will be, and the more time there is for building up high age reserves, which stabilize premiums in old age.
Utilizing Premium Reduction Tariffs: Consider taking out a premium reduction tariff to specifically provide for a later premium reduction. Check the possibility of employer contributions for this tariff.
Regular Review of Tariff Coverage: Use your contractually guaranteed right to change tariffs within your PKV to regularly review and, if necessary, adjust your insurance coverage. This can be a way to reduce premiums if your needs or financial situation change.
Understanding GKV Alternatives and Comparison: Understand the system differences and how premiums and benefits develop in GKV and PKV. The PKV's basic tariff offers a legally guaranteed alternative, whose premium is limited to the GKV maximum contribution and can be further reduced in cases of need.
Taking Advantage of Tax Relief: Ensure that you claim contributions to mandatory health and long-term care insurance comprehensively in your tax return to utilize tax advantages.
Summary
The costs of private health insurance in old age are a complex issue, but upon closer examination, they do not reveal arbitrary increases. The funded system with the formation of age reserves is the core of the PKV and ensures that premiums do not rise solely due to age. Additionally, the waiver of the statutory surcharge and daily sickness allowance in old age, as well as the possibility of premium reduction tariffs and tariff changes, contribute significantly to premium stability.
For a well-informed decision, qualified advice is essential to find the coverage that suits your individual situation.