Allocation of Contributions
A common fund exists for all social security components. Only the health insurance provider can be chosen individually by the employee.
Pension insurance is compulsory for employees. The premium is 18.6 percent of the gross wage and is divided equally between employee and employer. The employee’s health insurance company is responsible for collecting these contributions.
Employees earning a gross wage of up to EUR 59,400 per year are compulsorily insured by one of the public health insurance providers (Gesetzliche Krankenversicherung, GKV). Employees whose earnings are above this income threshold can choose from both public and private insurance companies (Private Krankenversicherung, PKV).
The basic flat health insurance contribution rate (public health insurance) amounts to 14.6% of the employee’s gross income and is equally shared between employer and employee. Employees pay an additional contribution set individually by each public health insurance provider. The average rate of additional contributions for 2018 has been set at one percent by the Federal Ministry of Health. The German National Association of Statutory Health Insurance Funds (GKV-Spitzenverband) provides a list of all public health insurance providers and their additional contribution rates online.
Employee and employer also share the premiums for private health insurance plans.
The premium for the mandatory unemployment insurance is 3.0 percent of the gross wage and is shared equally by the employer and employee. Contributions for unemployment insurance are collected by the health insurance company of the employee, which transfers the money to the Federal Employment Agency (Bundesagentur für Arbeit).
Nursing Care Insurance
Nursing care insurance is organized in more or less the same way as health insurance, with a contribution rate of 2.55 percent of the gross wage. Employer and employee both pay half of the contribution rate, with childless employees paying an extra 0.25 percent on top of their contribution. The premiums are deducted in the course of payroll accounting and transferred to the nursing care insurance company via the health insurance company. Specific regulations apply in the federal state of Saxony.
Statutory accident insurance provides coverage if an employee suffers an accident at the workplace or on the way to work. In contrast to the other four obligatory insurances (health, nursing, pension, and unemployment), the costs for accident insurance are exclusively borne by the employer.
Every employer must inform the relevant trading association about the establishment of his or her business and register with this organization. The accident insurance rate is determined on the basis of the company’s total remuneration sum and the hazard category of the work concerned (the hazard category is determined by the relevant employers' liability insurance association). According to the German Social Accident Insurance (DGUV), the average accident insurance contribution in 2016 was 1.18 percent.