Germany’s social security system

Under certain circumstances it is beneficial for foreign people to become voluntary members in one or more of the schemes. This is mainly the case for shareholders of foreign companies or partners of foreign partnerships who are not employed in Germany and therefore not obligatory members of Germany’s social security system.

In general expatriates want to join the German social health insurance scheme. The reasons can be that they have an underlying health issue, have reached a certain age, or have a big family with many children. Contributions to Germany’s social health insurance are limited to certain maximum amounts and family members without a considerable individual income are also included in the membership. On the other hand, private health insurances can become very expensive if the person has underlying health problems or many family members to insure. In these cases, a membership in Germany’s social health insurance can be beneficial.

A membership in one of Germany’s other schemes is in most cases not beneficial. Voluntary membership is possible for expatriates under the following preconditions:

Pension insurance

People who are 16 years of age or older can join Germany’s social pension insurance scheme. The person must have his habitual abode in Germany. The application must be made within five years after the person took-up an activity as a self-employed person or the end of an obligatory membership in the pension insurance scheme.

The scheme is seldom economically beneficial for expatriates living and working in Germany.

Unemployment insurance

A self-employed person can be voluntary member of the scheme if his weekly working hours are at least 15 hours and certain restrictive preconditions are fulfilled. Expatriates relocating to Germany in general do not fulfil these preconditions.

Occupational accident insurance

A self-employed person as well as shareholders of companies or active partners of partnerships can apply to become a member of the scheme. Notably, in general this is advisable because the voluntary insured person’s income will reduce any insurance compensations.

Health insurance

As mentioned above a membership in Germany’s social health insurance system can be more advantageous than to be privately insured. This is especially the case for two types of persons:

1. Shareholders of companies or partners of partnerships who are working for their entities and are not obligatory members of Germany’s social security system
2. Employees with a yearly income which exceeds the limit for mandatory insurance (limit for 2022: 64,350 Euro)

Voluntary membership always requires a home or habitual abode in Germany. Employees who earn remuneration exceeding the limit for mandatory insurance are always entitled to join the health insurance scheme on a voluntary basis. This also applies for expatriates who move to Germany and keep up an employment with yearly remunerations exceeding the limit.

For shareholders and partners of companies and partnerships the opportunities are far more restricted. Persons are entitled to join the health insurance scheme if they have, within a period of 5 years before leaving mandatory membership, been insured for at least 24 months, or if they have been insured for 12 months directly before leaving mandatory membership. This provision covers persons who must leave the health insurance scheme and want to continue membership. This is for example the case if they keep up an occupation as self-employed person. Expatriates who relocate to Germany do not in general fulfil these requirements. Shareholders and partners of foreign companies and partnerships who relocate to Germany are in general not entitled to become voluntary members of Germany’s health insurance scheme.

Severely disabled persons have also the right to join the health insurance scheme. The disability degree must be at least 50%. This must be certified by a medical report and a certificate of the competent administrative authority from one of Germany’s 16 federal states. The disabled person must have been within the last 5 years a mandatory member for 3 years. Mandatory membership of 3 years is not required if the disability disallows the person to perform an employment subject to mandatory insurance. What is unsettled is the question of whether a disability certified by a foreign authority may be good enough to prove that the person was prevented by the disability to work within the five-years period. This is for example the case if the US Department of Veteran Affairs certifies a major disability of a former US army member.

If a person becomes a voluntary member of the health insurance scheme, he automatically becomes obligatory member of the nursing care insurance.

Autor: Peter Scheller, Steuerberater, Master of International Taxation, Fachberater für Zölle und Verbrauchsteuern

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