Expats living and working in Germany make regular contributions to the social security system (Sozialversicherungssystem). This comprehensive, collectively-financed system is designed to protect the livelihood of anyone who might require extra support.
As well as a system of compulsory, statutory insurance schemes that cover Germany’s residents in the event of sickness, old age or unemployment, there are various benefits and allowances available to help anyone on a low income cover basic living costs.
German statutory insurance system
Anyone who is employed in Germany is required to make compulsory social security contributions. The contribution burden is split evenly between you and your employer, meaning that the average total social security contribution is around 20 - 22% of your salary. Your social security contributions are deducted directly from your monthly pay by your employer and cover the following areas:
Statutory health insurance (gesetzliche Krankenversicherung - GKV)
Almost everyone is required to contribute to statutory health insurance (currently around 90% of the population is covered by a GKV scheme). If you are self-employed, or you earn more than 66.600 euros per year, you can choose to take out private health insurance or voluntarily contribute to GKV.
Your contribution is around 14,6% of your gross salary, split equally between you and your employer (7,3% each), up to a maximum monthly income of 4.987,50 euros in 2023. GKV covers most medical costs, including hospital treatment, dental care and medicines.
Contributing to a statutory health insurance scheme also automatically qualifies you for sickness benefit (Krankengeld) and maternity benefit (Mutterschaftsgeld) (see below).
Pension insurance (Rentenversicherung - RV)
Anyone working in Germany is obliged to participate in a pension insurance scheme. Over time, your contributions build up to provide you with a basic provision for your retirement. If you are self-employed (i.e. you run your own business or are a freelancer), you can choose whether to opt into the statutory pension insurance scheme or start a private pension plan.
The statutory contribution is currently 18,7% of your salary (9,35% each for employee and employer), up to a maximum contribution ceiling of 7.300 euros in western Germany and 7.100 euros in eastern Germany.
Long-term care insurance (Pflegeversicherung)
Since 1995, everyone in Germany has been required to contribute to long-term care insurance, which covers you in the event of your needing care due to old age, accident or illness. Anyone who has statutory health insurance is automatically covered; if you have private health insurance you may need to specifically apply for long-term care insurance.
The contribution is currently 3,05% of your gross income (plus an extra 0,35% if you don't have children) up to a maximum contribution ceiling of 4.987,50 a month in both eastern and western Germany. This contribution (excluding the surcharge for childless people) is split equally between you and your employer. The deductions are transferred to your health insurance scheme.
Unemployment insurance (Arbeitlosenversicherung)
Workers in Germany are also required to contribute to unemployment insurance. These contributions are used to provide unemployment benefits to anyone who is out of work.
The contribution is currently 2,4% of your gross salary, up to a monthly maximum limit of 7.300 euros in western Germany and 7.100 euros in eastern Germany. The contribution is shared by you and your employer (1,2% each).
To make sure everyone can access the unemployment insurance scheme, you can also make voluntary unemployment contributions, if you are:
- Self-employed for at least 15 hours a week
- Employed outside Germany in a non-EU country
- On a course of occupational further training
- On parental leave beyond the child’s 3rd birthday
Occupational accident insurance (Unfallversicherung)
Established in Germany in 1884, occupational accident insurance offers protection and assistance in the event of workplace accidents or job-related illnesses. If you are employed or in occupational training, you are automatically covered, no matter what salary you earn. The insurance scheme also covers school-age children and students. If you are self-employed or run your own business, you can take out voluntary insurance for yourself (and your spouse if they work with you).
In the event of an accident at work or occupational illness, the statutory insurance covers:
- Payment for medical treatment (including rehabilitation)
- Benefits and services to aid your reintegration into the workforce (e.g. training)
- Compensation for you and your dependents.
The contributions for statutory accident insurance are funded entirely by your employer, meaning you will be covered at no extra cost to yourself.
Social security ID (Sozialversicherungsausweis)
Once you start making contributions to the statutory insurance scheme, you will be automatically issued with a social security ID (Sozialversicherungsausweis) to prove that you are a member of the system. You will need this ID if you want to start a new job, claim benefits, or start drawing a pension.
Benefits & Allowances in Germany
As well as statutory health insurance, pension insurance, unemployment insurance and long-term care insurance, the German government’s social security system also provides several different benefits and allowances. These are available for anyone on a lower income to help them cover basic subsistence costs such as rent and raising children:
Housing benefit (Wohngeld)
Housing in Germany can be expensive. To ensure that everyone has adequate, family-friendly housing, the German government provides housing benefit to those who have lower incomes.
This benefit can either be rent support (Mietzuschuss), for tenants who are renting, or mortgage and home upkeep support (Lastenzuschuss), for those who own a house.
Child benefits (Kindergeld)
To support parents with the costs of raising children and providing them with food, clothing and education, the government provides child benefits to almost all parents in Germany. There are various benefits and allowances that parents can benefit from.
Maternity benefit (Mutterschaftsgeld)
If you are a member of a statutory health insurance scheme, you are entitled to maternity benefit for six weeks before and at least eight weeks after childbirth. If you are not covered by a statutory insurance scheme, you can also claim benefit from the Federal Insurance Office.
Parental allowance (Elterngeld)
Parental allowance is also available to both parents to support them during the first months of their child’s life. The benefit offsets loss of earnings and enables both mother and father to rest with their new baby.
Sickness benefit (Krankengeld)
Anyone who contributes to a statutory health insurance scheme automatically qualifies for sickness benefit. If you are unable to work due to illness, you will be covered by for up to 78 weeks, either your employer or your health insurance provider.
Child sickness benefit (Kinderkrankengeld)
If your child falls ill, you are legally entitled to take time off work to take care of them. Some employers will continue paying your salary; if not, your public health insurance provider will step in. The child sickness benefit (Kinderkrankengeld) partially reimburses you for any lost earnings.
Additionally, there are many tax-free allowances that expats might be eligible for, including costs for childcare or education and statutory insurance contributions. You can find out more about these deductions, and how you can take advantage of them, on our Annual tax return page.