Compulsory insurance in accordance with the law

If children and spouses are insured in private health insurance, many of these insurances do not meet the requirements for compulsory insurance. The wording of the law requires that every person who is legally able to do so must himself conclude a contract in private health insurance that complies with the law, because § 193 para. 3 VVG reads:
“Every person domiciled in Germany is obliged to take out and maintain with an insurance undertaking licensed to do business in Germany, for himself and for the persons legally represented by him, insofar as they cannot take out policies themselves, a medical expenses insurance policy which includes at least reimbursement of the costs of outpatient and inpatient medical treatment and under which the absolute and percentage deductibles for outpatient and inpatient medical treatment agreed for benefits provided for in the tariff are limited for each person to be insured to an effect in terms of amount of 5,000 euros per calendar year; (…)”

Only underage children are legally represented by their parents – for them, therefore, sufficient insurance taken out by the parents is sufficient to fulfil the legal insurance obligation. In contrast, spouses and children who are of full age or have come of age in the meantime require a separate contract. Lack of own financial capacity is not an impediment: In this respect, there are first of all maintenance claims for reimbursement of the premiums for an adequate insurance. If the parent or spouse obliged to pay maintenance is not able to pay himself or herself, there may be a claim to the reduced contribution in the basic tariff or even social assistance (§ 12 par.] c VAG).

The wording of the law is clear. Thus, the Regional Court of Hagen (judgement of 11.10.2010 ref.: 10 O 128/10) states: “The co-insurance of the (divorced) husband concerned here does not affect this obligation of § 193 para. 3 sentence 1 VVG. This is already supported by the wording of the provision, which expressly restricts the obligation to take out and maintain medical expenses insurance to the policyholder himself and to persons legally represented by him. (…) This also does not lead to a circumvention of the insurance obligation standardised in § 193 Paragraph 3 VVG, since this naturally nevertheless exists for the formerly co-insured husband. As a person with full legal capacity, however, it is incumbent on the formerly co-insured person himself to comply with this obligation.” Of course, this then applies just as much to the still-married spouse and children who have already reached the age of majority. Such a contract only about one parent or the other spouse does not serve to fulfil the insurance obligation according to § 193 VVG.

Insurer may give extraordinary notice of termination

In the event of default in payment of premiums, the insurer may not give extraordinary notice of termination of a contract which serves to fulfil the insurance obligation pursuant to § 193 VVG (§ 206 para. 1 VVG). However, he may terminate the contract in this respect if it exists for the co-insured spouse or children of full age. Of course, after a termination for default, they have the right to terminate the contract pursuant to § 206 para. 3 VVG itself as future policyholders. The situation is different if the insurer terminates the contract, e.g. due to billing fraud. It can be left open whether such a termination is permissible in the case of the person of the policyholder (so OLG Celle, judgement of 24.02.2011, ref.: 8 U 157/10) or never (so OLG Hamm, judgement of 06.05.2011, ref.: 1-20 U 153/10). With regard to the only co-insured spouse or the adult children, § 206 para. 1 VVG is not protected against extraordinary termination because their co-insurance is precisely not covered by the contracts protected under § 193 VVG. It also does not matter whether the co-insureds had anything to do with the billing fraud. They are then also not entitled to continued insurance as new policyholders. If necessary, the only option open to them is the basic tariff with another insurer.
The OLG Celle ruled that billing fraud on the part of the policyholder entitles the insurer to global termination – this means that the insurer itself can block the way to its basic tariff for the partial “rescue” of any ageing provisions there. The OLG Hamm interprets § 206 para. I VVG, on the other hand, states that any termination by the insurer is excluded insofar as the contract fulfils an insurance obligation pursuant to § 193 VVG. At some point, the BGH will perhaps be able to decide how the legislator should have understood the new VVG – and the legislator may then formulate it more clearly if he wants to have meant it differently.
The policyholder can terminate the contract of his co-insured spouse and his children of full age – for effectiveness it is only necessary that he proves their knowledge of the termination. It is then incumbent on them, if necessary, to take out an insurance policy themselves that fulfils the insurance obligation in accordance with § 193 VVG or to make use of their right to continue as new policyholders in accordance with § 207 VVG.

Insurers illegally demand proof of new insurance

Many insurers see this differently and refuse to recognise the effectiveness of such a termination. They refer to Section 205 (6) VVG: “Notwithstanding paragraphs 1 to 5, the policyholder may only terminate an insurance policy that fulfils an obligation under Section 193 (3) sentence 1 if he concludes a new contract for the insured person with another insurer that fulfils this obligation. The termination shall only become effective if the policyholder proves that the insured person is insured with a new insurer without interruption.” The LG Hagen (judgement of 11.10.2010 Az.: 10 O 128/10) disagreed with this and ordered the insurer to repay the premiums unlawfully charged after effective termination for the spouse formerly co-insured since then. The required conversion of the policyholder status in conformity with the law can therefore be effected by ordinary termination and subsequent unilateral declaration of the formerly co-insured spouse and the adult children to continue in accordance with § 207 VVG as new policyholders of their own without the insurer being able to refuse this.
Brokers who do not inform about this fact or about the design rights may be liable for the lost benefits and increased premiums if the only co-insureds completely forfeit their insurance coverage without their own fault in case of an extraordinary termination, e.g. due to accounting fraud of the policyholder. Thus, if they continue their insurance in the basic tariff of another insurer, they may pay the additional premium to the previous insurance, as well as the uninsured additional benefits of the lost tariffs, such as for optional benefits in hospital and for dental prostheses. However, the broker must also clarify who is to bear the premiums in economic terms and what effect the separation of policyholder status has on the tax recognition of the contributions to private health insurance as well as any employer subsidy.

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

published in Performance, issue 12.2011)

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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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