German Health Minister plans to raise health insurance costs

Health Minister Karl Lauterbach says the German government needs to address the huge deficit of statutory health insurance organisations, with plans to raise contributions paid by insured people in Germany.

A selection of German health insurance cards.
A selection of German health insurance cards. Photo: picture alliance/dpa | Jens Kalaene

Germany’s statutory health insurance companies expect to face a shortfall of €17 billion next year.

In order to close this financing gap, Health Minister Lauterbach is planning to increase the contributions of those insured.

Addressing the deficit in an interview with the Neue Osnabrücker Zeitung, Lauterbach said: “We have to turn four screws: we have to raise efficiency reserves in the health system, use reserves in the health insurance funds, grant additional federal subsidies, and raise contributions.”

The politician, who belongs to the centre-left Social Democrats, did not give an idea of how much contributions would go up. “It would be unprofessional for me to report to you here from the ongoing talks,” he said. 

READ ALSO: How to make the most of reward schemes on your German health insurance

At the moment the cost of public health insurance in Germany amounts to 14.6 percent of gross income. For employees, the employer pays half of the contribution rate.

A reduced rate of 14 percent applies to people not entitled to sick pay like those who are self-employed.

On top of that, health insurance providers set an additional contribution, which can currently be up to 2.5 percent. As The Local has reported, several health insurance organisations have increased their own contribution rates, particularly since the Covid-19 pandemic began.

Around 86 percent of the German population is covered by by statutory health insurance.

As well as the pandemic putting a massive strain on the system, health insurance companies have also been dealing with expensive reforms aimed at modernising Germany’s healthcare system.

According to the Association of Statutory Health Insurance Funds (Spitzenverband Bund der Krankenkassen or GKV), providers will be short of around €17 billion in 2023.

Insurers and opposition parties are calling for clarity on where the money will come from, but the Health Minister urged patience. “I will present a well-considered bill in time,” said Lauterbach. 

The minister stressed however that “lobby interests will not play a role in the restructuring of the health insurance finances”.

Meanwhile, Lauterbach said that “in a few weeks” he would name members for an expert commission on the reform of German hospitals.

Lauterbach said of the commission’s mandate: “The quality of care must be improved and it must become more efficient. And we must ensure security of care despite extreme staff shortages.”

He said that Germany is heading towards a situation “in which we have too few nurses and too few doctors in many regions. We have to find answers to this.”

At the beginning of the week, Lauterbach made it clear in an interview with the Tagesspiegel newspaper that there will be no cuts in benefits for medical care despite the financial gap. “I have made a commitment: I will not cut anything,” he said.

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Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 


What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life