Private health insurance for the self-employed.

5 reasons why private health insurance is a good choice for the self-employed

1. Your private health insurance premiums are determined by your age and health status – not your income

2. Private insurance policies are as flexible as you are, so choose a policy that meets your needs

3. Your health is protected as effectively as possible – thanks to swift access to specialists and modern treatment methods

4. Having set out on your own, private insurance helps you to set yourself up for later in life – with aging reserves and opportunities to further reduce your premiums in old age

5. Your digital lifestyle is safeguarded, wherever you are – and, depending on your chosen tariff, you might benefit from worldwide health protection

Extra tip: Include your deductible when planning your annual budget. If you don’t use it, you can look forward to a bonus at the end of the year.

Health insurance: Essential insurance for self-employed people

Health insurance is mandatory for everyone living and working in Germany. If you’re self-employed, you’re responsible for making your own decisions in many areas of your life – and also enjoy greater freedom than employees when it comes to health insurance. This is because you’re free to choose between the public and private insurance systems.

Who counts as self-employed?

Private health insurance for entrepreneurs and tradespeople

You are self-employed if you are free to determine how you work and do not have an employment relationship. For entrepreneurs and tradespeople, private health insurance is part of being independent. In Germany, there are different legal forms of self-employment. But which applies to you? Here’s how to tell:

Freelance professionals

The German word for freelance professionals, Freiberufler, is related to the term freie Berufe, which means “liberal professions”. Section 18 of the German Income Tax Act (EStG) sets out a catalog of such activities. As a result, engineers, tax advisors, consultants, doctors, and lawyers are freelance professionals and do not pay business tax.

Tradespeople

If your professional activity is not listed in the catalog of activities in Section 18 EStG, you are a tradesperson and must pay business tax. As a tradesperson, your private insurance payments are tax-deductible, so include it in your annual tax return.

Freelancers, freelance collaborators, etc.

In Germany, people who use the English term “freelancer” can fall into either category. Legally, this term only means that you work for a company without a fixed employment contract.

Benefits, tariffs & costs of private health insurance for self-employed

Private health insurers are service providers, so you can compare different benefits and tariffs before ultimately selecting the insurer that best meets your needs.

What factors determine the costs of private health insurance?

Factors that affect private premiums:

• Your age
• Your health status
• Your chosen level of cover

You can configure components such as your deductible and daily sickness allowance to adjust your premiums. As a young freelance professional or tradesperson with a good income, you’ll often pay less in the private system than with public health insurance.

Characteristics of private insurance

• Premiums adjustable and not tied to income
• No family insurance cover
• Only switch to public insurance system if you sign an employment contract

Characteristics of public insurance

• Premiums dependent on income
• Family members can be co-insured for free
• Switch to the private insurance system at any time

Self-employed people with public health insurance

In the public insurance system, the only way to influence your premiums is by changing to a provider with a different surcharge.

Public health insurance surcharges

Your premiums depend on your monthly income. This includes income from capital investments and rental property. The minimum income threshold is €1,061.67 per month. In the public health insurance system, the maximum premium with a 1.1% surcharge and sick pay is €919 per month. As a result, engineers, doctors, and other high-earners often pay more for public health insurance than they would in the private system.

Important note: When you’re starting out, your public health insurance premiums will be calculated based on an income tax assessment notice or a profit estimate. If you earn more than expected, you will have to pay extra to make up for this.

Is private or public insurance more sensible for self-employed?

1. Private health insurance protects you

If you get sick and cannot work, you will have to make up for this yourself. Find out how your insurance provider can support you. In the private health insurance system, you determine when you start receiving daily sickness allowance and how much. By contrast, the public system has fixed upper limits on sickness benefits.

2. Private health insurance helps you provide for your future

Your future is in your hands. So, why wouldn’t you choose a future-proof health insurance policy? Demographic change is driving up public health insurance premiums. In the private system, however, you provide for later in life, such as through premium relief components. You can invest what you save by choosing private rather than public insurance and invest it in financial markets. This helps you to prepare for old age.

Private health insurance premiums are also tax-deductible for self-employed people, so include your premiums in your annual tax returns. As a self-employed person, you are responsible for declaring your private insurance premiums in your tax return. You can also claim your family’s basic coverage.

3. Private health insurance allows you to set your own priorities

Don’t want to risk an illness draining your dynamism? Private health insurance offers unparalleled services, such as high-quality dental services, natural health practitioners, screenings, and more besides. In contrast to public health insurance, there is no risk of your benefits being curtailed in the private system.

4. Private health insurance adapts to your life plans

If your business is growing more modestly and you plan to have a large family, public health insurance might be the better choice. However, if you plan to focus on your career to begin with and have a smaller family further down the line, private insurance is ideal for you. It also protects you if you’re not tied down to a specific location and would like to live abroad. Insurance from ottonova provides Europe-wide cover with no time limits – and even worldwide for six-month periods.

But no matter where you are, ottonova’s Concierge service will always be there for you – and you can access digital doctor’s appointments whenever you need.

3 reasons why ottonova is perfect for self-employed people

1. Total control

In the private health insurance system, you can choose between different tariffs and adjust certain components to your needs, such as daily sickness allowance and your deductible – and thereby also influence your monthly premiums. You decide exactly what you need and always stay in total control.

2. Digital services reduce your workload

As a self-employed person, you already have enough to do managing your own business. The Concierge service from ottonova is enormously helpful, enabling you to manage your health insurance paperlessly using our app. Need a doctor’s appointment or some quick medical advice? The Concierge service can take care of this and many other health-related issues. The ottonova app also makes sure you always have an overview of your upcoming check-ups, appointments, and medical bills. Plus, we reimburse those bills at lightning speed.

3. All-around health protection

Unlike in the public insurance system, with private insurance you have access to the best healthcare services without having to worry about restrictions or limitations – including dental care and hospital stays. You’ll be back running your business again in no time.

What happens if I take a job somewhere?

If you ever decide to swap self-employed life for fixed employment somewhere, the decisive element is your salary in your new job. If your salary is above the compulsory insurance income threshold, you can keep your private health insurance. If your salary is below the threshold, you cannot keep your private insurance and must switch back to the public health insurance system – provided you are under the age of 55. You can secure a prospective entitlement (called an Anwartschaft) to return to us in future once your salary rises above the income threshold again without another medical examination. We’ll also continue to add interest to your aging reserves. And, if you like, we can provide useful supplementary insurance policies to supplement your public health insurance plan.

Supplementary insurance policies worth considering:

• Supplementary hospitalization insurance
• Supplementary dental insurance

What happens if I decide I want to stay in the public insurance system?

If you choose to keep your public health insurance when you start your own business, there’s one important point you need to remember: your insurance provider will need an estimate of your earnings to calculate your premiums. Many entrepreneurs are cautious when it comes to forecasting their new company’s profits. What a lot of people don’t realize, however, is that your insurance provider will check whether your estimate was accurate at the end of the year. If business has boomed and you’ve earned significantly more than originally expected, this could leave you facing additional bills of several thousand euros. This scenario is impossible in the private health insurance system, as private insurance premiums are not dependent on your income. With this in mind, private health insurance is eminently sensible for entrepreneurs. Many self-employed people could save hundreds of euros – and avoid the risk of running into arrears.

All-around cover with public health insurance? Supplementary insurance makes it possible

Decided you’d like to keep your public health insurance, but don’t want to miss out on first-class healthcare? Supplementary insurance policies from ottonova can top up your public health insurance to help you recover more swiftly.

Supplementary hospitalization insurance

Enjoy the ability to choose your preferred hospital, stay in a semi-private or private room, and have your treatment administered by a chief physician. You can pause your aging reserves and save money every month until you turn 38.

Supplementary dental insurance

Our supplementary dental insurance covers the gaps in public health insurance and protects you against exorbitant costs. Plus, with lightning-fast invoice reimbursement via our app, you’ll never wait long to get your money back.

Private health insurance for small business owners? What are the key issues?

In many cases, private health insurance is more affordable and flexible than the public system. The benefits of private health insurance are also likely to be more extensive than in the public system, depending on the tariff you choose. New small businesses are usually registered by young people – and their young age (and usually good health) puts them in an advantageous position when it comes to private health insurance, as it can significantly reduce their contributions. The costs of private health insurance are not dependent on your income. So, if your business is successful, the difference between public and private insurance can be hundreds of euros per month. Make sure to do your research and compare different tariffs.

Pension insurance for small business owners

As the founder of a new business, you can apply for an exemption from mandatory social insurance. You must submit this application in the first three months of starting self-employment. This exemption can be granted for up to three years. If you are a small business owner and released from your social insurance obligations, it is crucial that you put money aside for later in life and consider taking out private pension insurance.

Private health insurance for self-employed people on low income

As noted previously, self-employed people have a fundamental choice between private and public health insurance. A precondition of this freedom to choose is that the business or trade is your main source of income and not a side hustle. People starting a business can have very low income to begin with. However, as their income rises over time, if they have public health insurance then their premiums will also increase. The private insurance system does things differently. Specifically, the private system does not link your premiums to your income.

In any case, health insurance can become a financial burden. It is therefore very important to weigh up which insurance system is the best choice for you. Private health insurance can be advantageous for young, self-employed people on low incomes, because most are in good physical condition and can therefore take advantage of options to adjust their premiums.