Health Insurance
Health Insurance: 20 technical terms explained – definition, synonyms and legal basis.
Aging Reserve
Synonyms: Alterungsrückstellung
The aging reserve is a technical provision in private health insurance that offsets the age-related increase in healthcare costs and stabilizes premiums over the contract term.
Concept
The aging reserve is a technical provision that private health insurers build up to account for the statistically increasing healthcare costs of insured persons as they age. It is accumulated during the younger contract years from a savings component included in the premium and is used in later years to stabilize the premium.
How It Works
Because healthcare costs on average rise with age, premiums would otherwise increase substantially and continuously as the insured person ages, absent an aging reserve. By pre-funding through the aging reserve, part of this increase is financed in advance during younger years, resulting in a smoother premium trajectory over the contract term.
Portability
Since Germany’s 2009 healthcare reform, part of the aging reserve (the so-called transfer value) can be transferred to a new insurer when a policyholder switches private health insurers, in order to facilitate switching and strengthen competition in the private health insurance market.
Legal basis: DE: § 341f HGB
Outpatient Medical Treatment
Synonyms: Ambulante Heilbehandlung
Outpatient medical treatment is medical examination or treatment of an insured person that does not involve admission to a hospital, such as treatment by a physician in private practice.
Concept
Outpatient medical treatment refers to a medically necessary examination or treatment of an insured person that does not involve admission to a hospital, such as treatment by a physician in private practice, at a day clinic, or as part of outpatient surgery.
Distinction from Inpatient Treatment
The distinction between outpatient and inpatient treatment is significant for tariff purposes, since private health insurers typically offer separate tariffs for outpatient, inpatient, and dental care, which may carry different reimbursement rates and deductibles.
Relevance for Cost Reimbursement
Under private health insurance, the insurer reimburses the costs of outpatient medical treatment according to the agreed tariff, often subject to a percentage reimbursement rate or an annual deductible. The insurer’s obligation to pay always hinges on the medical necessity of the treatment.
Incapacity for Work
Synonyms: Sick leave
Incapacity for work describes the illness-related state in which an employee can no longer perform their most recent occupation, distinct from occupational and general disability.
Concept
Incapacity for work describes the state in which an employee, due to illness, can no longer perform their most recently held occupation. The term must be distinguished from occupational disability and general disability, which relate to different, typically more permanent reductions in earning capacity.
Effects
An employee who is incapacitated for work is generally entitled to continued payment of wages by the employer for up to six weeks. This entitlement takes precedence over any claim to sick pay from the health insurer, which only becomes relevant once continued wage payment ends and amounts to a lower percentage of previous earnings.
Relevance to Insurance
The distinction between incapacity for work, occupational disability, and general disability is central to claims assessment in health and disability insurance, since different benefit conditions and scopes attach to each state.
Admission Medical Examination
Synonyms: Aufnahmeuntersuchung
The admission medical examination is a medical examination of an applicant required by the insurer to assess the risk to be insured before a contract is concluded.
Concept
The admission medical examination is a medical examination of an applicant, required by the insurer, used to assess the health risk to be insured as part of underwriting before a health or life insurance contract is concluded.
Use Cases
Admission medical examinations are typically required for high sums insured in life insurance and for comprehensive private health insurance tariffs, where the applicant’s written health declarations alone are insufficient for an adequate risk assessment.
Relationship to the Duty of Disclosure
The results of the admission medical examination supplement the information provided by the applicant under the pre-contractual duty of disclosure, and together they form the basis for the insurer’s decision to accept, decline, or accept on modified terms.
Basic Tariff (Basistarif, PKV)
Synonyms: Basistarif
The Basic Tariff is a statutorily mandated tariff in German private health insurance offering benefits comparable to statutory health insurance, with a mandatory acceptance obligation for insurers.
Concept
The Basic Tariff is a tariff mandated by Section 152 of the German Insurance Supervision Act (VAG) that every private health insurer must offer, with a scope of benefits comparable to that of statutory health insurance.
Mandatory Acceptance and Underwriting
The Basic Tariff carries a mandatory acceptance obligation: the insurer may not decline an application on account of the applicant’s health status and may not charge risk loadings. The premium is additionally capped at the average maximum contribution of statutory health insurance.
Relevance for the Previously Uninsured
The Basic Tariff was created primarily to provide previously uninsured individuals, as well as individuals leaving private health insurance, with access to affordable health coverage, thereby making the general insurance mandate introduced in Germany in 2009 practically enforceable nationwide.
Civil Servants' Health Allowance (Beihilfe)
Synonyms: Beihilfe
Beihilfe is the employer allowance paid by the state to civil servants and their dependents toward medical costs, typically supplemented by private complementary health insurance.
Concept
Beihilfe is a welfare benefit provided by the state as employer, granting civil servants, judges, and soldiers, as well as their eligible dependents, a percentage allowance toward their medical, long-term care, and childbirth costs.
Allowance Rate
The applicable allowance rate depends on marital status and the number of eligible children and typically ranges from 50% for childless civil servants up to 80% for retirees and civil servants with multiple children.
Complementary Private Health Insurance
Since Beihilfe covers only a portion of medical costs, civil servants regularly take out private complementary health insurance for the remaining share, with tariffs precisely calibrated to the individual civil servant’s allowance rate, thereby enabling complete cost coverage.
Premium Adjustment (Beitragsanpassung, PKV)
Synonyms: Beitragsanpassung
Premium adjustment is the statutorily regulated increase or decrease of premiums in German private health insurance when actual benefits paid deviate sustainably from calculated levels.
Concept
Premium adjustment is the statutorily regulated adjustment of premiums in German private health insurance under Section 203 of the German Insurance Contract Act (VVG) and Section 155 of the Insurance Supervision Act (VAG), which becomes necessary when actual insurance benefits (treatment costs) exceed or fall below calculated values not merely temporarily, but sustainably.
Triggering Thresholds
An insurer may only implement a premium adjustment if the deviation between calculated and actual insurance benefits exceeds a tariff-specific threshold, which in Germany is typically between 5% and 10%; the specific threshold must be reviewed and confirmed by an independent trustee.
Role of the Independent Trustee
Every premium adjustment in German private health insurance requires the approval of an independent trustee, who reviews the calculation basis and the appropriateness of the adjustment to protect policyholders from unreasonable premium increases. Premium adjustments are frequently politically and socially controversial in Germany, as they can place a significant financial burden particularly on older policyholders.
Premium Refund (No-Claims Bonus, PKV)
Synonyms: Beitragsrückerstattung, No-Claims Bonus
A premium refund is the partial repayment of premiums to private health insurance policyholders who made no or only minor claims in the prior observation period.
Concept
A premium refund is the partial or full repayment of premiums paid to private health insurance policyholders who did not use, or only marginally used, insurance benefits during a defined observation period.
Mechanism
Insurers set aside part of the annual surplus for premium refunds and distribute these funds to eligible policyholders after a typically one-year claims-free period has elapsed; the amount of the refund frequently depends on the number of consecutive claims-free prior years.
Incentive Effect and Criticism
Premium refunds are intended to encourage policyholders toward conscious, cost-conscious utilization behavior, but are criticized because they can, in individual cases, deter policyholders from promptly seeking medically necessary treatment in order not to jeopardize the refund.
Case Management
Synonyms: Case Management
Case management is the coordinated, individualized support of claims cases aimed at faster recovery, reintegration, or appropriate care for the insured.
Concept
Case management refers to the coordinated, individualized support of an insured during a claims case, particularly in health and disability income insurance, aimed at improving the insured’s health status and shortening the duration of benefit payments through targeted management of treatment, rehabilitation, and reintegration.
Process
A case manager, often a medically or clinically qualified professional, analyzes the individual case, coordinates cooperation between treating physicians, rehabilitation facilities, and the insured, and accompanies the entire recovery or reintegration process beyond mere claims assessment.
Benefits for Insureds and Insurers
Effective case management can serve the insured’s interest by promoting faster and more sustainable recovery or occupational reintegration, and the insurer’s interest by reducing the duration and amount of benefit payments; accordingly, case management is gaining increasing importance particularly in private disability income and daily sickness benefit insurance.
Chronic Illness
Synonyms: Chronische Erkrankung
A chronic illness is a long-lasting, generally not fully curable disease that is subject to special underwriting and benefit rules in health, disability, and long-term care insurance.
Concept
A chronic illness is a long-lasting disease, typically persisting for months or years and generally not fully curable, that requires ongoing medical care and can permanently impair the affected person’s daily life or ability to work.
Relevance for Underwriting
When applying for health, disability, or long-term care insurance, existing chronic illnesses must be disclosed under the pre-contractual duty of disclosure, since they can significantly influence the insurer’s risk assessment and, depending on severity, lead to premium loadings, benefit exclusions for the condition concerned, or rejection of the application.
Relevance for Claims
In a claims case, chronic illnesses frequently raise the question of prognostic assessment of the further course of the disease, for example in assessing disability or need for long-term care, which is why chronic conditions regularly require particularly careful medical assessment and, especially in private health insurance, targeted case management.
Free Choice of Physician
Synonyms: Freie Arztwahl
Free choice of physician is the right of a privately health-insured person to select their treating physician from among all licensed doctors, without being tied to a fixed provider network.
Concept
Free choice of physician grants a privately health-insured person the right to select their treating physician or dentist freely, independent of a predefined physician network, provided the practitioner holds the appropriate license.
Significance as a Marketing and Quality Feature
Free choice of physician is traditionally considered one of the central quality features of private health insurance compared with statutory health insurance, where physician choice can be partially restricted by gatekeeper models or selective-contracting care structures.
Limits
Even with free choice of physician, the insurer’s obligation to pay remains tied to the medical necessity of the treatment and to the contractually agreed reimbursement rates; certain tariffs may also require treatment by specialists or the seeking of a second opinion.
Free Medical Care for Civil Servants (Heilfürsorge)
Synonyms: Heilfürsorge, Beihilfe
Heilfürsorge is a special benefit system under which certain professional groups (e.g., police, military) receive free medical services or benefits in kind directly from their employer in lieu of conventional health insurance.
Concept
Heilfürsorge is a special benefit system that exists for certain groups of civil servants – in particular police officers, career soldiers, and members of certain fire departments – in place of regular statutory or private health insurance. The employer directly covers medically necessary services as a benefit in kind in the event of illness, without requiring the beneficiary to pay premiums.
Distinction from Beihilfe
Heilfürsorge must be distinguished from Beihilfe, which applies to most other civil servants: while Beihilfe establishes a reimbursement claim against the employer for a portion of medical costs (supplemented by private residual-cost insurance), a person entitled to Heilfürsorge receives medical care directly as a benefit in kind, generally without any cost-sharing.
Relevance for Private Health Insurance
Persons entitled to Heilfürsorge generally have no need for comprehensive private health insurance; however, supplementary cover for benefits not covered or only partially covered by Heilfürsorge (e.g., dentures, single/double hospital rooms) remains relevant.
Medical Aids (Hilfsmittel)
Synonyms: Hilfsmittel, Medical Devices
Medical aids are physical medical devices such as prostheses, hearing aids, wheelchairs, or vision aids, the cost of which is reimbursed under health and long-term care insurance in accordance with the applicable tariff terms.
Concept
Medical aids are physical items intended to compensate for a disability, prevent an impending disability, or secure the success of medical treatment, without directly acting on the body themselves. Typical examples include prostheses, orthopedic aids, hearing aids, wheelchairs, vision aids, and incontinence aids.
Distinction from Therapeutic Remedies
Medical aids must be distinguished from therapeutic remedies, which have a direct therapeutic effect (e.g., physiotherapy, occupational therapy, speech therapy) and are generally administered by medical professionals. This conceptual distinction is central to the benefits catalogs of both statutory and private health insurance, as different reimbursement rules, fixed amounts, or co-payment obligations frequently apply to each category.
Reimbursement under Health and Long-Term Care Insurance
The scope of reimbursement for medical aids under statutory health insurance is governed by the medical aids directory, while under private health insurance the individual tariff terms are decisive; long-term care insurance also contains supplementary rules for care aids intended to facilitate daily care.
Compulsory Insurance Income Threshold (Jahresarbeitsentgeltgrenze)
Synonyms: JAEG, Jahresarbeitsentgeltgrenze
The Jahresarbeitsentgeltgrenze is the annually determined income threshold in Germany above which employees are exempt from mandatory statutory health insurance and may switch to private health insurance.
Concept
The Jahresarbeitsentgeltgrenze (compulsory insurance income threshold) is an income threshold under German social insurance law, adjusted annually by statutory ordinance, that determines the gross annual income above which an employee is no longer subject to mandatory membership in statutory health insurance (GKV).
General and Special Thresholds
A distinction is made between the general threshold and a lower special threshold that applies to employees who were already privately insured on the basis of their income as of December 31, 2002 (grandfathering provision). Both thresholds are adjusted annually to reflect income developments and published in the Federal Law Gazette.
Relevance for Private Health Insurance
Exceeding the compulsory insurance income threshold is a central precondition for an employee to be exempted from statutory health insurance and to take out substitutive comprehensive private health insurance; for insurance intermediaries, correctly verifying this precondition is an essential part of advising clients on switching from the GKV to the PKV system.
Annual Maximum Benefit (Jahreshöchstleistung)
Synonyms: Jahreshöchstleistung, Annual Limit
The annual maximum benefit is the maximum amount agreed in health or supplementary insurance tariffs up to which the insurer reimburses costs for certain types of benefits within one policy year.
Concept
The annual maximum benefit refers to the maximum amount set out in many health and supplementary health insurance tariffs up to which cost reimbursement is made for a particular type of benefit within one policy year. It provides the insurer with calculation certainty and limits the insured cost risk for benefits that recur predictably but are otherwise potentially unlimited.
Typical Areas of Application
Annual maximum benefits are frequently found in tariffs for dentures, vision aids, alternative practitioner services, travel health insurance, or outpatient supplementary insurance, where they are structured either as an absolute amount or as a percentage of actual costs subject to a cap.
Distinction from Other Forms of Limitation
Unlike a general sum insured, which limits the maximum total benefit over the entire contract term, the annual maximum benefit always relates to a single policy year and typically resets to its full amount upon contract renewal; it must also be distinguished from deductibles or waiting periods, which govern other aspects of benefit entitlement.
Deferred Period (Karenzzeit)
Synonyms: Karenzzeit, Elimination Period
The deferred period is the contractually agreed span of time between the occurrence of an insured event and the start of the insurer's obligation to pay benefits, particularly under daily sickness benefit and disability insurance.
Concept
The deferred period is the span of time between the occurrence of an insured event (e.g., the onset of incapacity for work) and the point at which the insurer first becomes obligated to pay benefits. It must be distinguished from the waiting period, which refers to the time between contract inception and the general existence of coverage for certain types of benefits.
Application in Daily Sickness Benefit Insurance
In daily sickness benefit insurance, the deferred period is individually tailored to the policyholder’s needs and frequently coincides with the point at which a prior form of protection (e.g., statutory employer-paid continued wages) ends; a longer deferred period generally results in a lower premium.
Application in Disability Insurance
In disability insurance, an agreed deferred period can mean that annuity payments begin only after a certain period has elapsed following the onset of disability, thereby reducing the premium compared to immediately commencing benefits; this structure is frequently chosen where other short-term protection already exists.
Cure Treatment (Kur)
Synonyms: Kur, Kurbehandlung
A cure treatment is a medically prescribed, usually multi-week course of treatment at a climatically or therapeutically suitable location, whose reimbursement under health and supplementary insurance is subject to specific tariff conditions.
Concept
A cure treatment is a medically prescribed course of treatment carried out over an extended period, usually several weeks, at a location particularly suited climatically or therapeutically (e.g., a health spa or resort), serving to treat, alleviate, or prevent chronic conditions.
Reimbursement Conditions
Reimbursement of cure treatment costs under private health insurance is generally subject to stricter tariff conditions than outpatient or inpatient acute treatment; a prior commitment to pay benefits by the insurer, an assessment by a public health officer, or evidence of unsuccessful outpatient treatment attempts is frequently required. Minimum waiting periods between two reimbursable cure treatments are also common in many tariffs.
Distinction from Rehabilitation Measures
A cure treatment must be distinguished from medical rehabilitation, which primarily serves to restore working capacity following an acute illness, surgery, or accident and, in many social insurance systems, is primarily funded through pension or accident insurance, whereas the classic cure treatment has a more preventive and curative character.
Additional Health Insurance Contribution
Synonyms: Zusatzbeitrag
The additional contribution is the fund-specific share of the premium that members of Germany's statutory health insurance (GKV) must pay on top of the general statutory contribution rate.
Concept
If a statutory health fund’s allocation from the central health fund is insufficient to cover its expenses, it must raise the shortfall through an additional contribution. Since 1 January 2015, this has been income-related and calculated as a fund-specific percentage of each member’s contributory income.
Collection
The additional contribution is borne solely by the member, but since 2015 it has been withheld and remitted by the employer together with the rest of the social insurance contribution, rather than being paid separately by the member to the fund.
Practical relevance
Because the additional contribution falls solely on members, it creates price competition among health funds: funds try to avoid raising it to prevent losing members to cheaper funds, with the risk of underinvesting in prevention and quality of care.
Supplementary Insurance
Synonyms: Top-up insurance
Supplementary insurance is an additional policy that extends an existing main contract, or statutory social insurance cover, with extra benefits.
Concept
Supplementary insurance can be taken out with the same insurer as the main policy or with a different provider. It generally lapses when the main contract ends, and sometimes earlier. Typical examples are supplementary private health policies complementing statutory health and long-term care insurance, and disability or accidental-death riders in life insurance.
Distribution channels
Since the 2004 GKV Modernisation Act, statutory health funds have been permitted to broker certain private supplementary policies, such as travel health insurance abroad or surcharges for elective hospital services. The policyholder’s contractual counterparty is always the private insurer, never the health fund itself.
Practical relevance
Supplementary insurance targets specific coverage gaps in the base policy without replacing it. Its attractiveness largely depends on how much the base cover limits benefits – for example for dentures or single/double-room surcharges in hospital.
Co-payment
Synonyms: Cost-sharing
Co-payments are additional payments by insured persons, over and above their normal contributions, required to access certain benefits under Germany's statutory health insurance (GKV).
Functions
Co-payments serve a financing function, easing the burden on the collective through cost-sharing by insured members, and a steering function, aiming to encourage more cost-conscious demand for services.
Design under statutory health insurance
For inpatient treatment, EUR 10 per calendar day applies for up to 28 days a year; for medicines, dressings and medical aids the co-payment is 10 percent of the dispensing price, with a minimum of EUR 5 and a maximum of EUR 10. Children and adolescents up to age 18 are exempt from co-payments except for travel costs. A statutory burden cap limits total annual co-payments to 2 percent of gross family income (1 percent for the chronically ill).
Distinction
Co-payments under statutory health insurance must be clearly distinguished from deductibles in private health insurance, where the insurer only reimburses above the agreed deductible; private health insurance does not have co-payments in the narrower sense, since it operates on a cost-reimbursement principle.