Owning and operating a small business in Germany is synonymous with having a health insurance as a paramount responsibility. Employing your first employee or leading a team of twenty, adequately comprehending the German health insurance system is necessary for you. Besides being a legal obligation, going for the right options can also help you get big savings in costs and provide your employees with the best benefits.
The Reason why Health Insurance is Necessary for Small businesses in Germany
Germany’s healthcare system is, without a doubt, the best in the world, and the basis of its success is a dual model:
- Public (Statutory) Health Insurance (Gesetzliche Krankenversicherung – GKV)
- Private Health Insurance (Private Krankenversicherung – PKV)
Being a small business owner in Germany, the provision of health insurance is not only a good practice but also a legal requirement if you have employees.
Step 1: Get an idea of the German Health Insurance Market
Before you proceed with registration, it is essential that you first familiarize yourself with the available choices:
- Public (Statutory) Health Insurance (GKV)
This is a system that is most commonly used and thus the default one. Nearly 90% of the population of Germany are covered by GKV.
Main Providers in 2025:
- TK (Techniker Krankenkasse)
- Barmer
- DAK Gesundheit
- AOK (various regional branches)
- SBK (Siemens-BetriebEmployer covers approximately 50% of the premium Besides medical insurance it also includes dental, mental health, and maternity coverage Usually, family members (spouse and children) are free of charge 2. Private Health Insurance (PKV)Private insurance is an alternative for:The ones earning a large income (gross salary over €69,300/year in 2025) Freelancers and individuals with self-employment Civil servants
- Employer covers approximately 50% of the premium
- Besides medical insurance it also includes dental, mental health, and maternity coverage
- Usually, family members (spouse and children) are free of charge
- The ones earning a large income (gross salary over €69,300/year in 2025)
- Freelancers and individuals with self-employment
- Civil servants
Step 2: Registering for Health Insurance as a Small Business
If You’re a Sole Proprietor or Freelancer:
Public and private insurances are the options you can choose from. Most people opt for GKV at the beginning for the sake of simplicity and cost predictability. You should sign up for health insurance directly with a provider and pay the full contribution (both employer and employee parts) by yourself.
If You’re Employing Staff:
First of all, here is the way to do the registration in 2025:
- Register Your Business with the Trade Office (Gewerbeamt)
- Get a Business Tax Number from the Finanzamt
- Apply for a Company Number (Betriebsnummer) via the German Federal Employment Agency (Bundesagentur für Arbeit)
- Register for Social Security through the Information and Notification Procedure (DEÜV)
- Employees Choose Their Health Insurance Fund As an employer, you cannot choose for them. They must notify you of their provider.
- As an employer, you cannot choose for them. They must notify you of their provider.
- Set Up Payroll Contributions You’ll pay half of the statutory premium (currently 14.6% + additional surcharge). Additional contributions range from 0.9% to 2.2% depending on the provider.
- You’ll pay half of the statutory premium (currently 14.6% + additional surcharge).
- Additional contributions range from 0.9% to 2.2% depending on the provider.
Step 3: Compare Health Insurance Providers and Plans
Even when employees choose a public health insurance fund, it is also necessary to compare providers in order to get an idea about the prices, customer service, and pluses.
Public Health Insurance (GKV) Comparison Factors:
- Additional Contribution Rate: Some insurers have a higher Zusatzbeitrag.
- Digital Services: Such as mobile applications, telemedicine, and handling of claims.
- Bonus Programs: Several Krankenkassen provide incentives for maintaining health.
- Example GKV Premiums for 2025 (based on €4,987.50/month income cap):
| Provider | Additional Contribution | Total Monthly Cost (Shared) | Employer Share |
| TK | 1.2% | ~€805 | ~€402.50 |
| Barmer | 1.5% | ~€821 | ~€410.50 |
| AOK Plus | 1.0% | ~€790 | ~€395.00 |
Private insurance is more complex, and pricing is individualized. Premiums may start around €300/month for young, healthy freelancers and rise significantly with age or additional coverage.
Step 4: Save Big with Smart Strategies
Here’s how small business owners can cut down on health insurance costs while still providing strong benefits to their employees.
✅ Hire Employees Under the Mini-Job Limit
If your employees earn less than €538/month (2025 mini-job threshold), you will not be obliged to provide full insurance. Your contribution is still made to the pension fund and health insurance at the flat rate.
✅ Use Payroll Software
Today’s payroll tools such as DATEV or Lexware will calculating contributions instantly which will result in saving you time and money and also avoiding mistakes.
✅ Encourage Employee Prevention Programs
Some health insurers are key to focus on prevention and health initiatives as they can provide the option of lower premiums or money-back bonuses.
✅ Use Tax Deductions
The amount of your employees’ health insurance premium that you pay is fully deductible from tax as the cost of operating your business in Germany.
✅ Negotiate with Private Insurers (PKV)
In case you and your high-earning employee meet the requirements to apply for PKV,
Private vs. Public: Which Is Better for Small Business Owners?
| Feature | Public (GKV) | Private (PKV) |
| Cost Control | Based on income | Based on age/health |
| Employer Contribution | Required | Not required for freelancers |
| Coverage | Standardized & comprehensive | More flexible, but variable |
| Dependents Covered | Yes, often free | Each must be insured |
| Ease of Admin | Very simple | More paperwork, more options |
Best for Employers with Staff: GKV
Best for High-Income Freelancers or Owners: PKV (if you want fast access and premium services)
Final Thoughts
Health insurance in Germany is a structured but flexible system. As a small business owner in 2025, you have access to a range of public and private health insurance options that meet both your legal requirements and your employees’ expectations.
By understanding your obligations, comparing providers, and using strategic tools, you can offer excellent healthcare benefits without overspending.
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