Social security for EU citizens in Germany

The social security of people in Germany is good. So, employed EU citizens, who are insured for social security, are protected against all substantial risks such as illness, work accidents, unemployment or old age.

Which social insurances exist in Germany?

In Germany five statutory social insurances exist:

statutory health insurance /

The statutory health insurance covers the costs for doctor, hospital, medicine and medical treatment.

Statutory long-term care insurance

The statutory long-term care insurance provides benefits, when long-term nursing care is required due to an illness or old age. However, it is only a basic insurance.

Statutory pension insurance scheme

The statutory pension insurance scheme pays a pension to retired employees. The amount of the pension varies according to the income and the number of years of employment in Germany.

Statutory accident insurance

The statutory accident insurance covers the costs for medical treatment and for the reintegration into the working life after a work accident or work related diseases.

Unemployment insurance

The unemployment insurance provides cash benefits in case of unemployment. This generally requires that the unemployed person was insured at least one year of the last two years and searches for work again. Additionally, the Federal Employment Agency provides consultation and placement services for any unemployed person.

What does social insurance cost?

Every statutory insured employee pays a percentage of his income, defined by law for his membership in the social insurances. Also the employer pays a fixed percentage.

Example health insurance: The membership in statutory health insurance costs currently 15.5 percent of the gross income. The employees pay 8.2 percent, the employer 7.3 percent. The employee`s share is deducted from the employee`s salary and transferred to the health insurance fund by the employer. The same applies to the other social insurances. The shares to be paid by the employee are deducted by the employer and forwarded to the insurances directly. The employee does not have to make a bank transfer.

The contribution rates for social insurances are currently composed as follows:

Health insurance: The contribution rate amounts to 15.5 percent of gross income. The employee pays 8.2 percent from his gross income.

Pension insurance scheme: The contribution rate amounts to 18.9 percent of gross income. The employee covers 9.45 percent.

Long-term care insurance: The contribution rate amounts to 1.95 to 2.2 percent of gross income (depending on whether the employee has children or not). The employee pays 1 to 1.2 percent.

Unemployment insurance: The contribution rate is 3 percent of gross income. The employee has to pay 1.5 percent.

Accident insurance: The contribution rates vary depending on the work sector, but the employee does not pay any share to the insurance contribution. He is insured for free.

Statutory health insurance

The health insurance takes an exceptionel position among the statutory social insurances.

An employee automatically becomes a member in the insurances for unemployment, long-term care, accident and pension, but not in the health insurance. The reason for this is that there are no different insurance providers for the other insurance classes. For the health insurance, however, the statutory insured employee can choose from a variety of health insurance companies. The general contribution rate is the same for all health insurance companies, but few health insurance companies indeed charge an additional premium in the general amount of 8 Euros per month.

The largest health insurance company of Germany is the BARMER GEK. It has about 9 million members and is open to employees as well as trainees and students. Within the cooperation with the job-network EU to Germany, it is especially advisable for foreign employees. The Barmer GEK simply answers all questions on health insurance in its information centre for foreign employees with EU citizenship.

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For a certain annual income the membership in a statutory health insurance is no more legally compulsory. The employee can choose a private health insurance company. In 2013 this is possible for an annual gross income of 50,850 Euros. But caution: a change of the insurance company from a private health insurance back to the statutory health insurance is generally impossible. Therefore, the employee should give careful thought to a change from the statutory to a private insurance company.

Social security card

Any person, who is employed in Germany with the obligation to statutory social insurance for the first time, gets a social security card (Sozialversicherungsausweis) with a social security number (Sozialversicherungsnummer), also called pension insurance scheme number (Rentenversicherungsnummer). This number has to be communicated to the employer. The social security card has to be kept carefully. In case of loss, it can be substituted on request by the Deutsche Rentenversicherung.

Where are EU foreigners employed in Germany insured for social security?

For anybody, who is employed in an EU member state the statutory regulations of the state of employment are generally applicable. This means: For foreign employees from another EU member state working in Germany the German right of social security applies. Thus they are subject to social insurance contribution in Germany. This results from the directly applicable EU regulations on the coordination of social security systems, in particular from Regulation (EC) No. 883/2004.

Exceptions apply to employees posted to Germany by foreign businesses and for individuals, who are employed in two or more EU member states.

For individuals, who work in several EU member states, apply either the legal regulations concerning social security of the state of the employee’s place of residence or the regulations of the state of the employer’s registered office. The legal regulations of the state of residence are applicable, if the employee is employed with one employer, usually works in several member states for this employer and serves a significant part of the employment in his state of residence. That is to be assumed, if at minimum 25 percent of the work are performed there.

Reporting obligation for employed EU foreigners in Germany to become insured for social security

EU foreigners employed in Germany have to be reported to the social insurance system by the employer like German employees. The employer is legally obliged to inform the health insurance company in charge on his employees. This reporting obligation includes according to § 28a III ff. Book IV of the German Social Code (Sozialgesetzbuch) in particular the information on name, address, insurance policy number, citizenship, employment and the total amount of the paid remuneration.

The employee has to receive a copy of the report on his data from the employer.

For several sectors, an additional obligation for immediate registration was established by § 28a IV Book IV of the German Social Code. In these sectors, the employer is obliged to report the employment prior to the first work day. The obligation for immediate registration applies to the construction industry, to the hotel and restaurant sector, to the connected industries of forwarding, transport and logistics, to industrial cleaning and to the meat industry.

How is compliance with the provisions of the German social insurance law controlled?

At minimum every four years, the Deutsche Rentenversicherung (German statutory pension insurance) inspects the businesses, including the control of correct calculation and payment of social security contributions for foreign and domestic employees. Additionally, the department on undeclared employment of the Customs Administration controls whether the reporting obligation for social security is fulfilled by the employer.

Which legal consequences does a violation of the obligations have for the employer?

The violation of social security obligations for registration, contribution and recording is classified as undeclared, illegal employment according to § 1II No. 1 SchwarzArbG (Law on the control of undeclared employment). Missing contributions are charged ex post facto, if payments have been made improperly and the employer must pay a default fee for all contributions that were primary paid incorrectly.

Furthermore, the violation of social security obligations for registration, contribution and recording is punishable by fines; see § 111 Book IV of the German Social Code. Finally, the avoidance of the obligation on registration and contribution may constitute the offence of non-payment of wages according to § 266a German Criminal Code. Punishable is the withholding of the employer’s share to the social security contribution as well as withholding the employee’s share.

Which legal consequences does a violation of the provisions of the social security law have for employees?

An employee, who is insured for social security, has an obligation for assistance by providing the employer with all necessary information for the registration procedure of the social security system. Furthermore, the employee is obliged to inform the Customs Administration on his employment during inspections according to the law on the control of undeclared employment and to allow the monitoring authority the inspection of all documents, carried with him, which may contain information on amount, type or duration of the employment.

Employees in certain sectors, e.g. in the construction industry, in the hotel and restaurant sector, in the connected industries of forwarding, transport and logistics, in industrial cleaning and in the meat industry, have an obligation to carry a passport or alternative identity card. Violations are according to § 111 Abs. 1 Nr. 4 Book IV of the German Social Code, § 8 SchwarzArbG punishable by a fine.

Which claims for benefits can EU citizens make, who are insured for social security in Germany?

EU citizens, who are subject to German social security law, have the same rights and duties as Germans.

In certain cases, e.g. for statutory pension insurance, a minimum insurance period is required to constitute a claim for benefits. Of course, EU citizens also have to fulfill these requirements. Therefore all qualifying periods of the EU citizen in Germany and other EU member states are taken into consideration. Due to that, the insurance coverage does not lapse and the contribution periods do not expire, if an EU citizen leaves the member state and continues the employment in Germany.

Which benefits can be received from the social insurance in case of illness, industrial accidents or work related diseases?

EU citizens, who are insured for social security in Germany, can claim for benefits in case of illness, industrial accidents or work related diseases. The benefits are granted under the same conditions and with the same coverage as for nationals.

They are entitled to benefits in kind (Sachleistungen), in particular to inpatient and outpatient medical treatment as well as to pharmaceuticals, or to pecuniary claims for repayment of such services. Additional cash benefits (Geldleistungen) are sickness benefits and accident benefits.

What does the German compulsory pension insurance pay?

The German pension insurance agencies pay a pension corresponding with the pension insurance period spent in Germany. Individuals, who return to their home country after employment in Germany, do not have to expect disadvantages as the pension is paid regardless of where in the EU the EU citizen lives at the time of contribution. There is no deduction, delay or amendment.

If an EU citizen worked in more than one EU member state, the insurance periods of all member states, in which the EU citizen was employed, are taken into consideration for the entitlement to a pension and for the calculation of pension amount.

The German pension insurance calculates the amount of pension as if the EU foreigner has spent the whole insurance period contributing to the German insurance system (e.g. 35 years). Example: E.g. 5 years of work in Germany, 15 years in Poland and 6 years in Great Britain, are calculated as 26 years of work in Germany. Thus, the work in several EU member states does not cause any pension related drawbacks.

The German pension insurance agency then pays the share of the calculated pension, which corresponds to the insurance contributions actually paid and the periods spent in Germany. In the example mentioned before this would be 5/26 of the total amount. The remaining shares are paid by the pension insurance agencies of the other EU member states, according to the insurance periods spent there.

Any EU citizen, who worked in more than one member state, has to apply for pension in the member state, he is resident. However, if he has never worked there, he has to apply for pension in the member state of his last employment.

Export of the entitlement to pension from Germany

If one returns to the home country after some time of residence and employment in Germany, the entitlement to pension in Germany may be exported. EU citizens and citizens from the European Economic Area (EEA) or Switzerland keep their entitlements gained in the German social insurance. After retirement, a pension may be paid by each EU or EEA member state of employment, according to the specific conditions. If one, for instance, worked in two countries, one also receives pension from two countries.

After returning to the country of origin it is also possible to submit an application at the Deutsche Rentenversicherung for refund of the paid contributions. However, this is not possible until 24 months after termination of the German compulsory insurance, which is 24 months after termination of the employment with the German employer. The refund of contributions also requires that no entitlement to voluntary contributions exists. The pension insurance repays only half of the contributions made for the employer, thereby excluding the share paid by the employer. If the contribution is repaid, the insurance contract is completely extinguished and there is no later right to a pension.

Which further services does the German pension insurance provide?

EU citizens, who are insured for social security, have the same right to rehabilitation services than Germans. These are services for medical rehabilitation, services for participation in working life and complementary services for living.

The respective pension insurance agency is in charge for these services. The personal (medical) and insurance related requirements have to be fulfilled.

Are there any specific regulations for border-crossers?

A border-crosser is an employee, who does not perform his employment in the member state, he lives in, but returns to his place of residence at least once a week. Generally, there are no differences between border-crossers and any other employed EU citizens living in Germany concerning social insurance. Thus border-crossers are also subject to the social security law of the state of employment. Hence, if they work in Germany, they are subject to the German social security law.

However, there is an exception regarding benefits in kind in case of illness for which border-crossers may choose, whether to receive these benefits in the state of residence or in the state of employment.