The system is mandatory for everyone
Since the 2007 reform, residing in Germany means being affiliated to a health insurance scheme. There is no legal gap: either you join the public system (gesetzliche Krankenversicherung, GKV) or you take out private insurance (private Krankenversicherung, PKV).
The general rule is that employees enter the public system, unless their salary exceeds the compulsory insurance threshold (Versicherungspflichtgrenze), above which they can choose to switch to private.
The public system (GKV): how the cost is shared
The contribution to the public system is around 14.6% of gross salary and is split equally between company and employee. On top of that comes each fund's individual supplement (Zusatzbeitrag), which averages around 1.7% and is also shared.
The advantage of the public system is that it covers family members at no additional cost: if your partner does not work and your children are minors, they are insured with you. That is why many families stay in the GKV even if they earn enough to switch to private.
Private (PKV): cheaper at first, different later
Private insurance is priced according to your age and health status, not your salary. For a young, healthy worker it is often cheaper than the GKV and offers better coverage, such as a private room or direct access to specialists.
The nuance is in the long term: premiums rise with age and do not cover the family at no extra cost. Leaving private to return to public is difficult once you pass a certain age, so the decision must be thought through for the long term.
Self-employed and company owners
If you set up a GmbH and are the Geschäftsführer, you can choose between public and private with more freedom than an employee. The self-employed and executives pay 100% of the contribution, without the employer's half, which makes the public system more expensive and leads many to consider private.
In practice, the choice depends on your age, your family situation and how long you plan to stay in Germany. There is no single answer, and it is one of those decisions worth reviewing with an adviser before signing.
What this means if you hire employees
If your company is going to hire in Germany, registering for health insurance is part of the employee onboarding process. The company chooses the fund (usually the one the employee prefers), withholds the contribution from payroll and pays its share.
Failing to do it on time has consequences: the employee cannot contribute correctly and the company is exposed to surcharges. It is one of the procedures that payroll management handles, but it is worth knowing that it exists and is mandatory from day one.
