Private health insurance (PKV) as a cost trap for pensioners often leads to poverty in old age

If a private health insurance policy is taken out, or later changed around five times in a lifetime, the intermediary receives remuneration of around 8 times the monthly premium each time – in the past it could well be double what an insurance company paid for a new customer. It is commonly said that private health insurance is “cheap when you are young – expensive when you are old” – but it is hardly possible to avoid disproportionate premium increases in old age because they are almost inevitable as a result of the statutory calculation rules.


A change to statutory health insurance (GKV) would then also have the advantage that a living will is rarely required at the end of life to avoid unnecessary or pointless treatment. Around 40% of those insured under private health insurance later switch back to statutory health insurance, mostly as a result of compulsory insurance. This change is not always involuntary – just like remaining in private health insurance for some, for whom there is no longer any possibility of returning to statutory health insurance.


Poverty is no disgrace: PKV premium increase of up to more than 7.5% per year

It is not uncommon for private health insurance premiums to double every ten or twelve years, so that many pensioners soon spend more on private health insurance than they receive in pensions after taxes, despite any additional benefits. Admittedly, this is often more a problem of too low pensions than of too high private health insurance contributions. Affected are also privately pension-insured, whose pension amounts today up to less than 50% of that, which was once promised to you with insurance conclusion – not everyone can take up here its insurer because of falsified advertisement to fulfilment. Many a compulsory member of a pension chamber is in a similar situation, whose asset management, combined with the all too hesitant correction of overly high interest rate hopes and excessively short life expectancy, means that only a fraction of the old-age pension can be expected, which has been or still is promised in the annual communications. The option of solving the nutrition problem by containerizing, as others do, cannot solve a negative household budget in the long run either – with private health insurance costs accounting for an ever-increasing share of the budget compared to pensions.

Rescue via tariff change according to § 204 Insurance Contract Act (VVG)

Who has a PKV full insurance, usually has the greatest difficulty to get an overview of what other tariffs of the previous insurer could be available as an alternative, and to compare the benefits. In this case, the policyholder has a right to change tariff in order to reduce the monthly costs to less than half in individual cases – he would simply have to name exactly the tariff into which he would like to change, but which the insurer only likes to point out to healthy new customers. In most cases, hardly any intermediary is interested in presenting the advantages and disadvantages in a transparent and comprehensible manner, so that even this often requires consultation for a separate fee. What happens to the various parts of the ageing reserve and what effect they have after the change can only be understood by an actuary anyway, who will certainly reveal this secret to the layman for an obolos.


The fairy tale about the cheap standard tariff in old age

Agents like to reassure people with private health insurance that they can switch to the so-called standard tariff in old age – with monthly costs of around 100 euros. This tariff should not be confused with the basic tariff, which provides benefits in exactly the same way as the statutory health insurance, but almost always at its maximum contribution. Only for those who have already reached the level of needing assistance in the sense of social welfare, the premiums are halved in the basic tariff – if the need for assistance nevertheless continues to exist, they are reduced again to a quarter by a subsidy.

The standard tariff, which insureds can switch to at old age until 2008, is a bargain for those who prefer to wait for a disease to develop before seeing a doctor.
In general, no doctor is obliged to treat patients at the maximum fee rates of the standard tariff – with the exception of genuine emergencies, where a painkiller may be given so that the patient can find a doctor who will also treat him privately at the standard tariff fee rates without too much pain. SHI physicians are only obliged to treat genuine SHI patients.
It is true that the Association of Statutory Health Insurance Physicians (KÄV) has a mandate to ensure the provision of health care. That is, somewhere there must be by law some doctor who treats at the rates (if necessary, he is employed by the KÄV by the hour) – there patients can then get a free appointment for sometime, but should expect a longer journey and ask whether it is advisable to take a German-Korean phrasebook, or an app for the mobile phone. Usually, on the other hand, you will end up paying the bill yourself in order to be treated and get half back from the insurer under the standard tariff.
It is quicker to get medical help disguised as a train traveller in the ambulances attached to the station mission, where in the waiting room the waiting time until treatment or until you get a soup is sweetened by an obligatory sermon on the theme “Blessed are the poor”. There is also a hint that the poor widow’s last dime into the station mission’s collection bag counts for more than Bill Gates’ 100 million endowment for charity, and this is reinforced by the fact that all the eyes of those waiting for the soup are directed at the patient while the collection bag is held in front of his nose on a long pole and he waits for a suitable coin to come out of his purse. But you might as well limit your retirement planning to digging your own grave.


Voluntary statutory health insurance

The possibility to return to the statutory health insurance is limited. Before the 55th birthday, a compulsory insurance with a GKV must be established and then have existed for at least 12 months. This sometimes requires a salary sacrifice so that the income does not exceed the contribution assessment ceiling, and of course the organisation or exercise of the professional activity as dependent employment.


Short statutory GKV compulsory insurance is sufficient as an exception

However, you can also get compulsory GKV insurance by drawing unemployment benefit (not social benefit II or Hartz-IV), or by GKV family insurance if your own income does not exceed about 400 euros. Basically, one day of compulsory insurance in the GKV is sufficient to effectively terminate the PKV. If one then immediately falls out of the GKV again, one is immediately caught again via the compulsory insurance for the uninsured, if one does not comply with the request to prove a subsequent insurance (e.g. a private one). No one is forced to reactivate a private health insurance policy that has been converted to a private health insurance tariff after joining the GKV.

However, in terms of contributions, you will then be treated as a voluntarily insured person, so that income from renting and from capital assets will also be subject to contributions. It does not matter at all whether a return to private health insurance would theoretically be possible or whether there would even be an obligation to do so. The legislator does not (only) want everyone to have an insurance option, but that everyone is insured or that everyone who was once insured can no longer get out of it if he does not prove an actually existing subsequent insurance.
If you are older than 55, you will regularly not be covered by compulsory GKV insurance in this way.


Easier access to GKV after a stay abroad

The following special regulations continue to apply for access to statutory health insurance after a longer stay abroad:
As a rule, no access problems to the GKV arise if, upon return from abroad, employment subject to compulsory insurance is taken up in Germany. This also applies to persons who have reached the age of 55 when they take up employment. Admittedly, pursuant to § 6 para. 3 a SGB V, persons who have reached the age of 55 and become liable to insurance after 30 June 2000 are exempt from insurance (i.e. do not become members of the GKV, although apart from the age exception they would fulfil an element of compulsory insurance because of their compulsory insurance employment) if they have not been insured under the statutory health insurance scheme at any time in the last five years before becoming liable to insurance and if they have been exempt from insurance, exempt from compulsory insurance or self-employed as their main occupation in the Federal Republic of Germany (!) for at least two and a half years in these five years.
However, this last requirement is not fulfilled by persons who return after a longer (!, up to at least 2.5 years) stay abroad, so that the mentioned restriction of compulsory insurance does not apply to them. One does not have to have been GKV-insured in Germany before moving abroad, so one can have been PKV-insured, and also be self-employed. If one would have been insured in the GKV for one day before, one can save the move because of § 5 (1) No. 13 SGB V. The PKV ends conditionally mostly because of moving abroad, otherwise one cancels it. The employment after return to Germany must be a compulsory insurance (which would not lead to compulsory insurance only because of exceeding the age 55 without stay abroad).The persons concerned do not have to be impoverished. They may only find their PKV too expensive with the prospect that it will become unaffordable after retirement and the existing assets will be used up. Residence in a suitable foreign country will often go hand in hand with employment – at best with free board and lodging.


Design of PKV via supplementary tariffs

Depending on the agreement with the PKV insurer, it may be possible to switch advantageously to a private GKV supplementary tariff, for example by taking the entry age into account. At least it would be conceivable to keep only individual tariff modules of the private health insurance in addition by simply not terminating them in this respect. In this context, it can make sense to change the insurance cover in advance by means of a change of tariff in accordance with § 204 VVG in such a way that the tariffs are suitably broken down into the components that will be continued later without termination and that the largest possible part of the ageing reserve is located there, which is then no longer lost when the dispensable parts are terminated.


Tariff change after § 204 VVG in the private health insurance often better alternative

As a rule, however, when weighing up all the advantages and disadvantages, remaining in private health insurance in a tariff that is emaciated but still offers advantages over a statutory health insurance scheme will be the better alternative. Without experts or lawyers, it is unlikely that you will be able to enforce the best solution.


Dr. Johannes Fiala, Dipl-Math. Peter A. Schramm

courtesy of
Issue 47- Volume 9 – 04/2013

and (published in Die Tabakzeitung)

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About the author

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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