Effective January 1, 2023, the maximum possible employer contribution to private health insurance (PKV) increases significantly. This change is due to the rise in both the income threshold for statutory insurance contributions (Beitragsbemessungsgrenze) and the average additional contribution rate of the statutory health insurance funds. This also affects privately insured employees. Their employer pays, at most, the same contribution as a subsidy to the PKV that they would pay to the statutory health insurance for their other employees.
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How the Maximum Employer Contribution is Calculated
Since contributions to statutory health insurance have been financed on a parity basis again (since 2019), the additional contribution rate is also taken into account when calculating the maximum employer subsidy.
The employer of a privately insured employee also provides a contribution to the private long-term care insurance. For 2023, the change here is smaller than for the health insurance subsidy. Only the income threshold for contributions changed among the underlying calculation values.
2023 Maximum Employer Contribution Limits
The subsidies that employers must pay to their privately insured employees amount to in 2023:
| Insurance Type | Maximum Monthly Employer Contribution (2023) | Key Calculation Factor |
|---|---|---|
| Private Health Insurance (PKV) | Based on the statutory cap: 50% of the contribution calculated on the income threshold (€4,987.50/month in West / €4,837.50/month in East) plus half of the average additional contribution. | Contribution Assessment Ceiling & Average Additional Contribution Rate |
| Private Long-Term Care Insurance | Based on the statutory cap: 50% of the contribution calculated on the income threshold for care insurance. | Contribution Assessment Ceiling for Care Insurance |
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Important Exception for the State of Saxony
An exception applies in the Free State of Saxony. There, the Day of Prayer and Repentance (Buß- und Bettag) was not abolished as a public holiday to finance long-term care insurance. Therefore, a lower maximum employer contribution to long-term care insurance applies for the federal state of Saxony in 2023: €51.12 per month (2022: €49.58 per month).
Why This Matters for Your Financial Planning
Understanding these contribution limits is crucial for both employees and employers in Germany.
- For Employees with PKV: This defines the minimum non-taxable support you can expect from your employer. Your actual PKV premium may be higher, and you are responsible for paying the difference. This is a key cost factor when comparing PKV plans and evaluating your net income.
- For Employers: This is a mandatory benefit for employees who are eligible for and choose PKV. Accurate payroll calculation is essential to comply with regulations and provide correct net salary statements.
- For High-Income Earners & Self-Employed: While self-employed individuals do not receive an employer contribution, understanding this benchmark is useful for financial planning and when comparing the cost of private vs. statutory insurance.
A US Comparison: Employer Health Contributions
For American readers, the German system offers an interesting contrast. In the US, employer-sponsored private health insurance is common, but the structure differs:
- No Government Cap: There is no federally set maximum on how much an employer can contribute to a group health plan. Contributions vary widely by company, plan, and employee tier (e.g., employee-only vs. family coverage).
- Tax Treatment: Similar to Germany, employer contributions to health insurance premiums in the US are generally tax-free for the employee.
- Medicare for Seniors: For employees over 65, the US system shifts. Employers are not required to contribute to Medicare premiums (Part B), though some may contribute to supplemental Medigap or Medicare Advantage plans.
The German model provides a predictable, legally defined baseline for employer support, adding a layer of stability to the private health insurance market. Whether in Germany or the US, consulting with a knowledgeable insurance advisor or benefits specialist is key to optimizing your coverage and understanding your financial obligations.
Insurers and brokers are struggling in claims management with high backlogs, increasing claim frequencies, a shortage of skilled workers, and growing customer expectations. Manual processes are expensive and slow.