A deductible (also known as excess) is, in insurance terms, a maximum amount you agree to pay out-of-pocket for covered services before your health insurance kicks in to cover the majority or entirety of the cost. While in most cases it’s a fixed sum, it can also take the form of a percentage of the cost or the exclusion of coverage for certain services.
Since this amount is determined when first choosing an insurance, it’s crucial to understand how deductibles work to make sound financial decisions and choose the right plan according to your needs.
In this guide you’ll learn…
- Why deductibles matter in health insurance
- How deductibles work with different types of health insurance (including public and private)
- How to choose between high and low deductibles
Why deductibles matter in health insurance
As you are probably well aware, health insurance is mandatory in Germany. Understanding how deductibles work will give you more financial autonomy when planning your monthly budget and help you avoid setting your wallet on fire.
Simply put, the higher your deductible, the lower your premium, which is great if you are healthy and rarely need medical care. On the other hand, choosing a plan with a low deductible means higher monthly premiums, but you pay less when you need medical services.
Not every medical service will count toward your deductible. Most of the time, preventive care services like checkups and vaccinations are fully covered without affecting your deductible. However, services such as hospital stays, emergency room visits, and surgeries usually count toward it.
Make sure to check the terms of a plan before signing any contract!
The decision to choose a high or low deductible comes down to a trade-off between how much you want to pay monthly and how much you are willing to pay out-of-pocket when the need arises.
For example, let’s say you have an insurance plan that costs €3000 yearly, and you want to save money by reducing it to €2400 and picking a €1000 deductible. It’s a good idea if you are healthy…but if you get sick or injured and have to pay €1000 for care and services, then at the end of the year you’ll have paid €3400. In this case, the bet will not have paid off.
For whom does a deductible make sense?
People who would get the most out of high deductible plans are usually young, healthy and not expecting to frequently visit a doctor. A word to the wise: it’s highly recommendable that they have enough savings to cover out-of-pocket expenses should a medical urgency arise.
A high-deductible plan could also make sense for freelancers whose income differs every month. It would enable them to keep their insurance costs low, and if they maintain savings to cover a potential deductible, then they’ll be in better condition to manage their finances.
How deductibles work with private insurance
Private health insurance (Private Krankenversicherung or PKV) is a great option for those who want more flexibility. While it’s only used by 10% of German residents, in comparison to the public, it can be less expensive, you can get faster appointments and better coverage, and you can even receive money back if you make no claims in the calendar year.
Private health insurance providers can offer different deductible structures:
- Fixed deductibles: you pay a set certain amount out-of-pocket every year before the insurance coverage kicks in, typically between €1200 and €3000 per year.
- Percentage-based deductibles: when you sign up for a health insurance plan, you agree that you will pay a fixed percentage (usually between 10 and 30%) of whatever healthcare service you need, up to a maximum amount.
- Modular deductibles: this one is similar to the fixed deductible, except that it only applies to specific areas of your insurance, such as dental issues or inpatient care.
While Feather’s private health insurance comes only with a €0 deductible, you receive a monthly cashback of €100 (1200 per year). This cashback is to be used to pay the first €1200 of medical expenses in a year, and if your claims are lower than that you get to keep the difference.
As a plus, if you don’t submit claims for an entire calendar year, you get a bonus that starts at €343 with the standard plan and increases every year.
Private health insurance in Germany
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How deductibles work with public insurance
In Germany, about 90% of residents are covered by public health insurance (Gesetzliche Krankenversicherung or GKV), which is mandatory for employees earning under €69300 per year, and in most cases it doesn’t involve deductibles.
Insurers offer optional tariffs that allow policyholders to choose a deductible in exchange for lower monthly premiums or bonuses of up to €600 per year. However, you are bound to the chosen policies for at least three years.
For instance, Techniker Krankenkasse’s TK-PrämieFlex plan allows customers to opt out of certain services like rehabilitation treatments and professional teeth cleanings, and in return receive an annual payment in advance.
Meanwhile, AOK, DAK and BARMER have plans that reward policyholders with a bonus at the end of the calendar year if no services with a deductible are claimed.
If you think public insurance is the right choice for you, we have partnered with the country’s main providers to help you choose the more adequate option and sign up easily.
Sign up for public health insurance
How deductibles work with expat insurance
For expats in Germany, finding the right health insurance can be difficult, especially if they can’t get public or private plans (and the language barrier can get pretty intimidating!). That’s where Feather’s expat health insurance comes in, with an offering designed to cover non-EU citizens, freelancers, and students who may not qualify for or desire other types of coverage.
With Feather’s expat insurance plan, which has consistently been ranked as one of the top plans in the country, the deductible always amounts to €25 per insured event. If you need treatment for conditions that were known of in the six months before the start of the coverage, the deductible rises to €5000, with a limit of €30000 for the entire duration of the contract.
Those who take on our long-term expat insurance plan, which is an ideal option for people who have been in Germany for more than five years and don’t qualify for public or private insurance, are able to select a deductible of up to €3750.
High vs. low deductibles: which to choose?
It bears repeating: a high deductible plan will be great for some people and a bad idea for others, and vice versa. It’s up to you to decide which option suits your needs.
- High deductible plans: the best option if you don’t anticipate having to go regularly to the doctor and want to save money every month. But perhaps it’s not the finest option if you do sports or activities that might result in injuries.
- Low deductible plans: in these plans, a higher monthly premium means lower out-of-pocket costs. They are a good fit for people who regularly need medical care or expensive treatments, such as those with chronic conditions or families with young children. They are a good option for people who frequently get sports-related injuries.
Choosing a deductible is like betting on your health, and no one but you can determine whether a high or low deductible is the best option. So you have to consider all influencing factors: your age, health conditions and expected needs, financial stability, even what sports you practice (young and healthy ping-pong players can stick with a high deductible plan).
So if you are still unsure of what’s the best option for you, we have developed a recommendation tool that can analyze your lifestyle and determine which policy is more suitable for you.
And if you prefer a more personalized touch, we are here for you! Send us a message directly via the form below, or book a call with one of our expert.
