Back to Private Health Insurance with an Entitlement Insurance

What is an Entitlement Insurance Policy?

An entitlement insurance policy allows people insured under private health insurance (private Krankenversicherung or short PKV) to temporarily suspend their existing contract, if they currently do not need it. However, the original insurance coverage remains preserved without having to pay regular premiums for private health insurance.

Once the contract is reactivated, it resumes seamlessly under the originally agreed conditions - without a new health assessment or adjustments. This has the advantage that the insured person's health status at the time the contract was originally signed remains valid, preventing higher premiums caused by later health changes.

What does an Entitlement Insurance Policy do?

To better understand the benefits of an entitlement insurance policy, it helps to look at the factors that play a role when joining private health insurance:

• Age at entry
• Health condition at entry
• Desired level of coverage

The older a person is when entering private health insurance, the higher the risk of health impairments, which can lead to higher premiums. An entitlement insurance policy protects against exactly this disadvantage: it freezes both the health condition and the entry age at the time the original contract was concluded. 

Without an entitlement insurance policy, interrupting private health insurance would result in higher premiums upon returning later - due to both increased age and possible health changes. With the policy, however, the previous insurance status is maintained.

Previous insurance periods are also credited. This means they are saved and taken into account when the contract is reactived, which can reduce waiting periods, for example for dental treatments (dental levels). Instead of starting from scratch, you simply continue where you left off. 

Reasons for taking out an Entitlement Insurance Policy

There are various life situations in which an entitlement insurance policy in private health insurance can make sense:

Job change

If a privately insured person changes to salaried employment that requires statutory health insurance, they usually must switch to the public system. An entitlement insurance policy allows the existing PKV contract to be suspended, so the insured person can later return to PKV under the original conditions.

Students

Students who are privately insured during their studies can also take out an entitlement insurance policy. If, after graduation, they earn below the annual income threshold (JAEG), they generally have to switch to statutory insurance. An entitlement insurance policy secures the option to return to PKV later - for example, when earning a higher income or moving into a civil servant position eligible for state aid - without a new health check.

Staying Abroad

People who move abroad for a longer period often cannot maintain their German PKV coverage. An entitlement insurance policy ensures that insurance coverage can be reactivated upon returning to Germany without disadvantages.

Entitlement to Free Medical Care

Police officers, firefighters, and soldiers generally have a right to free medical care ("freie Heilfürsorge"), which covers their healthcare costs. As long as the free medical care exists, private health insurance is not necessary. With a entitlement insurance policy, however, they can secure a preliminary PKV contract and ensure they can later switch into PKV under the original conditions once their entitlement ends, for example upon retirement.

Future Civil Servants

An entitlement insurance policy can also make sense for people who are expected to become civil servants in the near future. They can conclude a PKV contract early and the policy to secure favorable conditions. Once they become civil servants and qualify for state aid ("Beihilfe"), they can switch into PKV without having to undergo another health assessment. 

When and for whom is an Entitlement Insurance Policy useful?

Freelancers, digital nomads, and young people with a passion for travel are often drawn abroad for several months or longer. If they firmly plan to return to Germany and want to regain their previous PKV coverage, an entitlement insurance policy can be worthwhile - provided they still meet the eligibility requirements for PKV.

Nowadays, very few people stay in the same job until retirement. Some try self-employment, while others pursue a new career path with a lower salary. If a self-employed person temporarily switches to salaried employment or their income falls below the mandatory insurance threshold, they usually have to switch to statutory health insurance. An entitlement insurance policy makes a later return to PKV much easier.

Civil servants can often complement their healthcare coverage with private health insurance. Some, especially police officers, receive free medical care ("freie Heilfürsorge"), meaning the state fully covers their healthcare expenses. They only need supplementary private health insurance after their active service ends, when they become entitled to state aid ("Beihilfe"). An entitlement insurance policy ensures they do not need to worry about financial disadvantages and protects them from risk surcharges. 

Small vs. Large Entitlement Insurance Policy

Entitlement Insurance Policy - A quick overview

• In private health insurance, an entitlement insurance policy can be taken out if someone temporarily leaves PKV or suspends their contract.
• During the entitlement period, no PKV benefits are provided.
• Upon returning to PKV, no new health assessment is required, and depoending on the type of policy, the original entry age may also be preserved.

Entitlement Insurance or Dormant Contract: Which option is right?

An entitlement insurance policy is not the same as a dormant contract. Even though the contract is inactive, it is not considered a dormant contract. A dormant contract refers to a situation where an insured person is no longer able to pay their premiums. In that case, no further premiums are due. 

A dormant contract makes sense if it is uncertain whether the insured person will return to PKV coverage. It's main advantage is that no premiums have to be paid.

By contrast, an entitlement insurance policy is useful when the insured person is certain they will return to PKV in the foreseeable future.

At ottonova, for example, daily sickness allowance insurance is suspended during parental leave and is therefore contribution-free during that time. 

Our Tip: Include the Entitlement Insurance Policy in your Tax Return

Both small and large entitlement insurance policies can be declared in a tax return. The extent to which the premiums are tax-deductible depends on the total annual contribution amount:

• If the annual amount is below €100, the entitlement insurance is a 100% tax-deductible. It can be added to your contributions to basic health insurance.
• If the amount exceeds €100, the excess amount may, among other things, be considered tax-deductible as a special expense.