Social insurance

In Germany, people are covered by the social insurance system. This statutory insurance system provides protection against risks such as unemployment, illness, the need for long-term care, disability, occupational accidents and occupational illness as well as security in old age. Even if you are starting self-employment on the side, you may still have to pay social security contributions.  Calculate the costs involved precisely and include them in your business plan.

Statutory or private health and long-term care insurance (Krankenversicherung, Pflegeversicherung)
In Germany, health insurance is compulsory even for self-employed persons.

Essentially, you can choose between

  • statutory health insurance (Krankenkasse) if you have already had statutory health insurance for a sufficient period in advance
  • and private health insurance.

If you had statutory health insurance before becoming self-employed, you can keep it in future. Ask your Krankenkasse out about the possibility of taking out a sickness benefit plan (Krankengeld). This allows you to compensate for part of your loss of income during illness. Self-employed women also receive maternity benefits (Mutterschaftsgeld), provided they have statutory health insurance and are entitled to sickness benefits.

Good to know: Are you starting a sideline business?
Are you starting self-employment alongside your job, studies, training, school, retirement or while caring for family? Then, depending on your situation, there are some special considerations regarding statutory health insurance. Find out more on the page Sideline Business

Ask your private health insurance company about the possibility of taking out a plan for sickness benefits (Krankentagegeld). As a self-employed person with private health insurance, you are not entitled to maternity benefits. Please note: After switching to private health insurance, it is difficult or impossible to return to statutory health insurance at a later date. Decisive factors include the insured person’s social security status, salary and age.

Seek professional advice and talk to your health insurance provider!

Statutory health insurance “gesetzliche Krankenversicherung”

The Federal Ministry of Health provides more information on financing statutory health insurance as well as information on contributions, additional premiums and upper earnings limits. A list of all health insurance providers together with their areas of coverage and supplemental contribution rates can be obtained from the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband).

Private health insurance

  • premiums depend on individual risk factors, medical history, age, the level of coverage you choose etc.
  • premiums are not linked to your income
  • Free family insurance is not possible. Every family member must have their own contract drawn up.

Further information on switching to private health insurance can be found on the website of the Federal Ministry of Health (Bundesgesundheitsministerium).

Long-term care insurance “Pflegeversicherung”

Long-term care insurance is the fifth pillar of Germany’s social insurance system in addition to the social insurances covering sickness, accident, unemployment and old age provision. It mainly covers the costs of care-related expenses. When taking out health insurance, you are automatically covered by long-term care insurance “Pflegeversicherung”: Statutory health insurance policyholders are insured with social care insurance. People with private health insurance must also get obligatory private care insurance with an insurance company of their choice. The Federal Ministry of Health provides more information on financing long-term care insurance as well as information on contributions, additional premiums and upper earnings limits.

Please seek professional advice

Statutory pension insurance (gesetzliche Rentenversicherung)

Statutory pension insurance is mandatory for certain occupational groups. For everyone else, there are options for voluntary coverage or private pension plans.

1. Mandatory Statutory Pension Insurance for the Self-Employed

Mandatory statutory pension insurance applies to various occupational groups:

  • Occupational Groups: Caregivers, childminders (day caregivers), licensed craftspeople or self-employed persons with only one client, such as commercial agents
  • Teachers and Educators: This includes both full-time and part-time teachers. The German Pension Insurance (Deutsche Rentenversicherung) interprets the term “teacher” broadly: tutoring counts just as much as golf or aerobics instruction. Self-employed activities such as coaching, training, moderation, supervision, or Feldenkrais pedagogy can also fall under this category.
  • Artists and Publicists: This includes all individuals who create, practice, or teach music, performing arts, or visual arts, as well as authors, writers, and journalists.
  • If you perform several self-employed activities, you may be subject to multiple pension insurance obligations. The combination of employment and self-employment can also lead to multiple insurance. You must then pay your contributions to the statutory pension insurance scheme for each individual insurance obligation, but no more than the contribution assessment ceiling in total.

Multiple Insurance Obligations

If you pursue multiple self-employed activities, you may be subject to a multiple insurance obligation (Mehrfachversicherungspflicht). Combining regular employment with self-employment can also lead to multiple insurance obligations. In principle, you must pay contributions to the statutory pension insurance for each individual obligation that arises, up to the statutory contribution assessment ceiling (Beitragsbemessungsgrenze).

Contribution Options for Mandatory Insurance

Regarding contributions, there are three options for mandatorily insured self-employed individuals:

1. Half standard contribution (Halber Regelbeitrag) for founders
2. Standard contribution (Regelbeitrag)
3. Income-based contribution (Einkommensgerechter Beitrag)

The German Pension Insurance provides information on current contribution rates for mandatorily insured self-employed individuals.

Exceptions

Are you starting self-employment alongside employment, family, school, training, studies, or retirement? If you pursue certain self-employed activities only to a minor extent (marginal employment / geringfügige Tätigkeit), you do not have to pay contributions to the statutory pension insurance. The German Pension Insurance has compiled further information and examples on its website and in a brochure (PDF, 711KB).

2. Alternatives for Non-Mandatorily Insured Self-Employed Individuals

If you are not subject to mandatory statutory pension insurance, you have two options with the German Pension Insurance:

Option A: Mandatory Insurance upon Application

Self-employed individuals can opt for mandatory insurance upon application within five years of starting their business. This secures full protection under the statutory pension insurance, including eligibility for a reduced earning capacity pension (Erwerbsminderungsrente) and rehabilitation measures.
Fact sheet: Mandatory insurance upon application for self-employed individuals.

Option B: Voluntary Insurance

For all other self-employed individuals, there is the option to pay voluntary contributions into the statutory pension insurance. You can determine the amount of your contributions individually within the statutory framework, between the minimum and maximum contribution limits. The German Pension Insurance provides information on current contribution rates for voluntarily insured individuals.

Who pays the contributions?

  • Those with mandatory coverage and those with voluntary coverage pay their premiums in full themselves.
  • Artists and publicists receive financial support: Their contributions are paid by the Artists’ Social Security Fund (Künstlersozialkasse – KSK), with the insured individuals paying their own percentage share.

3. Professional Pension Funds for Liberal Professions (Freie Berufe)

Members of regulated liberal professions such as physicians, pharmacists, architects, notaries, lawyers, tax consultants, veterinaries, chartered accountants, dentists and psychological psychotherapists are required to join professional chambers (berufsständische Kammer). Very often, this membership comes with a compulsory professional pension scheme (berufsständische Versorgung). You can be exempted from statutory pension insurance in favor of the professional pension scheme.
Institute for Liberal Professions (IFB): Am I subject to mandatory pension insurance? (PDF, 121 KB)

4. Private Pension Insurance and Retirement Planning

Self-employed individuals must plan their retirement provisions from the very beginning and calculate these costs into their budget. You can combine different options, for example, statutory and private pension insurance or other forms of retirement provisions.

Please seek professional advice:

  • Deutsche Rentenversicherung (DRV) (German Statutory Pension Insurance Scheme)
    Tel. 0800 1000 4800, email via contact form, a phone service for people who are deaf or hearing impaired is available. You can arrange an appointment with the Munich based advisory office “Deutsche Rentenversicherung Bayern Süd” by calling 0800 1000 480 15.
  • The municipal service Versicherungsamt der Stadt München(Social Insurance Advisory Office) offers free advice to those living or working in Munich and have questions about statutory health, accident and pension insurance. Book an appointment online.
  • The German Consumer Organisation “Verbraucherzentrale” offers fee-based advice on pensions and retirement planning.
  • FAQ on statutory pension insurance
Statutory accident insurance (Gesetzliche Unfallversicherung)
All self-employed persons, regardless of whether they are pursuing a main or sideline business, must register with the relevant Social Accident Insurance Institution within one week of starting.

Statutory accident insurance is one of five mandatory insurances within the German social security system. It covers accidents at work or on the way to or from work, and recognized occupational illnesses. This insurance may be compulsory for the entrepreneur depending on their activity. It is always compulsory if you employ people. The German Social Accident Insurance Institutions “Berufsgenossenschaften” are organised according to sectors.

For further information you can download the leaflet “German Social Accident Insurance“, available in 11 languages.

Please seek professional advice:

If you are unsure which Social Accident Insurance Institution is responsible for you, please either contact one of the institutions directly, or dial the toll-free phone number 0800 60 50 40 4 or send an E-Mail to obtain further information. A phone service for people who are deaf or hearing impaired is available.

Voluntary statutory unemployment insurance (Freiwillige gesetzliche Arbeitslosenversicherung)
As a full-time entrepreneur you can apply for voluntary unemployment insurance at the Munich Office of the Federal Employment Agency within three months after starting your self-employment.

Under certain circumstances, individuals who decide to leave self-employment can contract voluntary unemployment insurance. It costs around EUR 103 per month, although entrepreneurs only pay half the contribution rate in the first two calendar years. Voluntary statutory unemployment insurance for full-time self-employed persons must be applied for at the employment agency within three months of taking up self-employment.

Please seek professional advice: 

The Federal Employment Agency (Bundesagentur für Arbeit) provides information in a leaflet (PDF, 257 KB). You can reach the Bundesagentur für Arbeit by phone at 0800 4 5555 00, a phone service for people who are deaf or hearing impaired is available.

Artists’ Social Insurance (Künstlersozialkasse KSK)

The Artists’ Social Insurance (Künstlersozialkasse KSK) covers self-employed people that exercise an artistic or journalistic profession. It is compulsory with a focus on pension and health insurance. Applicants need to complete a questionnaire and enclose evidence of their activities. KSK will then check if the prerequisites for the artists’ social security insurance scheme are fulfilled. If artists or writers qualify to join KSK, they need to pay only approximately half of the cost of their contributions. This puts them in the same favourable position as employees, as the second part of the contribution is financed via a levy paid by companies which utilise artistic and journalistic/written works such as galleries, music schools, theatres, radio stations, advertising agencies or publishing houses and via a Federal Government grant.

KSK provides further information:

Please seek professional advice:

  • Contact KSK by phone at +49 4421 9289000 or by email
  • Attend a free online seminar by KSK to learn more about artists’ social insurance and how to file an application.
  • The non-profit organization Paul-Klinger-Künstlersozialwerk e.V. offers help with completing the KSK questionnaire and selecting evidence of activities. Contact them by phone at +49 89 57 00 48 95 or by email.
  • The City of Munich’s Cultural and Creative Industries team provides cultural professionals and creative individuals with free advice and support on self-employment and qualifications, networks, events and financing, finding studios, rehearsal space and exhibition space as well as assistance with applications and approvals procedures. A focus is on interim space in city-owned and private locations. Contact them by phone at +49 89 233 28917, by email or use their online contact form.
Special feature: A1 certification for cross-border activity

If you work temporarily in an EU country, in Iceland, Liechtenstein, Norway or Switzerland, you will always have to carry an A1 certification with you. It is proof of your existing social security protection in Germany. It is valid regardless of the length of your business travel. Other certifications may be required for other countries.

Please seek professional advice: