A transsexual may receive implants if her new breasts have not yet reached the size of an A-cup bra, the Federal Social Court in the central city of Kassel said.
"Transsexual insurance policy-holders can make a claim to treatment measures to allow them to adapt their gender, including surgical procedures on healthy organs to minimise their psychological suffering, so as to approach the appearance of the other sex that is desired," the court said.
It said such a procedure was justified even if the patient had not yet had a sex-change operation.
The court ruled in the case of a 62-year-old whose health insurance plan paid for hormone treatment and a sex change but whose breasts failed to grow to female proportions.
The insurance company declined to pay for an operation for larger breasts.
In a second case before the court, the insurance company paid for hormone treatments, cosmetic surgery to make the face more feminine and two operations to make the voice of a transsexual patient more womanly.
It had also approved a sex-change operation, which the patient had not yet undergone.
The company argued that hormonal changes could result from the genital operation and lead the breasts to grow and thus rejected a claim for breast augmentation.
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The court rejected the insurance companies' stance in both cases, stating that only when a patient's breasts "completely fill" an A-cup could they be considered to have reached an "undoubtedly gender-specific range".
The judges said that this right to breast-enlargement surgery applied even before a sex change, basing its ruling on a recent decision by Germany's top court which found that such a procedure was not a requirement for a legal name change.