Social Security and Employee Benefits in Germany
Expatriates can take advantage of the generous German social security benefits while living here and even, in some cases, when they return home.
Germany has an elaborate social security system that sees to it that its citizens live comfortably even if they're sick, disabled, unemployed or retired. Expatriates can also participate in the system to a large degree.
People with jobs must, as a rule, make payments to four parts of the system, for health insurance, long-range nursing care, pensions and unemployment. These payments will usually come to about 40% of gross income, but the employer normally pays half of the cost, meaning that the employee is out of pocket only 20% of his income. Other pillars of the social security program are company accident insurance, paid for completely by the employer, and social indemnity, which the state handles.
The premiums depend on income. The greater it is the more must be paid, up to a certain limit. In 2012, the premium is about 15.5% of gross income for the national health insurance, the exact amount depending on the insuring company. Persons earning more than €50,850 per year (€4,238 monthly) may be able to choose their own private health plan if they meet certain criteria. For long-range nursing care insurance the payment is 1.95% or 2.2%, also up to €4,238. The 2012 yearly income limits for pension and unemployment insurance are €67,200 in the former West Germany and €57,600 in the former East Germany. The charges are 19.6% for pension insurance and 3% for unemployment insurance.
Health insurance. About 85% of the German population is insured under the Gesetzliche Krankenversicherung (GKV), the German version of a national health system. It covers such things as hospital stays, dental care, routine doctor visits, drugs, eyeglasses, immunizations and x-rays. It also compensates persons for loss of income due to illness.
Employed persons making more than €4,238 monthly have the option of either remaining in the statutory health insurance plan or taking out private insurance. The employer still will, with certain limitations, pay half the premiums of the private insurance plan. Self-employed persons can, under certain circumstances, also be insured under the statutory plan, or they may take out private insurance regardless of their income.
Persons in both the statutory and private health plans are automatically enrolled in the long-range nursing insurance (Pflegeversicherung) plan, covering health costs resulting from old age or disability. (For more information, read our article on Health Insurance.)
Pension insurance. This statutory old age insurance fund ensures that employees can maintain an appropriate standard of living when they retire. Payments are generally made from age 65, and the maximum payout currently amounts to some 67% of average net income during the insured's working life. (The retirement age is to be gradually increased to 67 over the next 20 years.) It is not unusual for persons to receive retirement payments from two or more countries. When expatriates return to their homeland any German pension entitlement can be sent to them there. (For more information read our article on the German Retirement System.)
Unemployment insurance can be received by persons who have paid their premiums for at least one year during the past five years. They must register with the Labor Office (Bundesagentur für Arbeit) and be available to its placement service, agreeing to accept a job found for them if it is consistent with their training and experience. And they must check regularly with the Labor Office. If they do this they will receive a percentage of their most recent net income. The exact payment depends on the individual's circumstances.
These payments will continue for six months to two years, depending on your age and length of employment. After that state assistance kicks in. The unemployed person gets a monthly sum plus allowances for housing and certain other things. But they only get this money if they need it. They may get less, or none at all, if they have independent means or if their spouse works.
Accident insurance. The statutory accident insurance system offers protection and assistance in the event of mishaps at work, or on the way to and from work. And it provides the same for your children at school or on the way to or from school. It also covers any job-incurred illnesses. Payments cover the costs of treatment and recuperation, pensions in the event of invalidity and funeral costs in the event of death. The employer pays the premiums on this one in their entirety.
Social indemnity is for persons whose adverse condition is considered the responsibility of the community, and is paid by the state. Those covered include disabled war veterans, war widows and orphans, soldiers with service-incurred health problems and the victims of violent crime.
Some exceptions to these insurance plans may be made in the case of foreigners. For example, if you know you are only working temporarily in Germany you may be able to get a special health insurance plan with very favorable premiums. You could possibly also bring your health or long-term nursing insurance coverage with you from your homeland, and be partially or entirely freed from these obligations in Germany. You can also continue to receive any retirement or unemployment payments that are due you in Germany even if you return to your home country.