The ageing provision is without doubt an advantage of private health insurance. But when it comes to insuring beneficiaries and their dependents, it sometimes leads to risks that brokers should explain in good time.

One civil servant insurer is said to already have several hundred 80-year-olds who no longer have to pay any premiums for their private health insurance. This can be explained, for example, by the fact that a civil servant’s wife who had been self-employed for many years had to take out 100 percent private insurance. The insurer then assumes that she is still 100 percent insured at the age of 80 and forms correspondingly high ageing provisions.

If she now gives up her job, she will become a dependant eligible for 70 percent of the allowance. It now only has to insure 30 percent – so the premium could drop to about 30 percent. However, 70 percent of the ageing provision is now also “surplus” – but this is not simply eliminated, but is additionally taken into account to reduce premiums. The contribution can thus be reduced to zero.

But life can also play out quite differently:

A civil servant receives a 70 percent allowance for himself and his wife in old age – he only has to insure 30 percent. For this – and only for this – ageing provisions have also been built up. For example, the 66-year-old wife pays 200 euros for private health insurance. If she now divorces – a fairly common occurrence – she will not have built up any ageing provisions for the additional 70 per cent insurance cover required.

If 30 per cent residual cost reimbursement for the new addition at the age of 66 costs 300 euros, then the additional 70 per cent – without entitlement to benefits – costs about 700 euros more, this means your contribution rises to about 900 euros per month. This is the result of a 1,000 euro new premium at age 66 minus the 100 euro discount from the ageing provision only for the 30 percent rate. At the same time, the civil servant himself no longer receives the family allowance.

The consequence is that both parties are now allowed to argue at state expense on the grounds of de facto need for assistance. General disbelief about these actuarial effects means that legal aid also pays for expert witness fees. At the latest, spouses in divorce proceedings learn that it is not “in court and on the high seas”, but rather “before the experts and on the high seas we are in God’s hands”. It takes little effort to look for a culprit – the PKV intermediary.

Brokerage advice: waiver of aid

Brokers should educate about these economic risks. It may be better for the civil servant’s wife to remain in the statutory health insurance scheme instead of taking out insurance cover at rates that are compliant with the assistance scheme. This advice would also have to be considered for those who are only eligible for aid during their active period in the first place.

If you don’t have to buy 100 percent insurance until you retire, it can be very expensive for you. Some broker clients might then get the idea to hold their broker harmless. However, if there is the alternative of choosing a one hundred percent insurance cover with possibly even employer subsidies instead of the subsidy, such advice becomes even more lucrative for the broker.

This is not only the safer solution – the employer also participates in the provision through ageing reserves. In addition, the broker can reduce his liability if he considers that the deductible (SB) and non-reimbursed medical expenses can at best be deducted for tax purposes as extraordinary expenses, whereas the alternatively higher private health insurance premiums could be better included in the tax return as special expenses. Those who like to broker low-cost tariffs with high deductibles and reduced benefits should be aware that the statutory minimum cover in VSH can at best be a sop.

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

by courtesy of

www.performance-online.de (published in Performance, issue 09/2010, page 49)