bKV Tax Calculator

Key Points at a Glance

• Up to 50 euros per month, the bKV premium is exempt from taxes and social security contributions (Section 8(2), Sentence 11 of the Income Tax Act (EStG)).
• The exemption limit applies to the total value of all non-cash benefits received in a given month. If this limit is exceeded, the entire amount is taxable—not just the portion that exceeds the limit.
• Above the threshold, the following options may be considered: the flat-rate method under § 37b of the Income Tax Act (EStG) at 30 percent, the flat-rate method under § 40 of the Income Tax Act (EStG) at the approved average tax rate, or individual taxation.
• The calculator compares the employer's costs for the supplementary health insurance plan with those of a pay raise that results in the same net amount for the employee.

Select a budget or a specific plan from our portfolio and compare it directly to a pay raise at the same cost to the employer.

How Company Health Insurance Is Taxed

The employer’s contribution to a supplementary health insurance plan (bKV) constitutes a benefit in kind for employees. Whether income tax and social security contributions are due on this contribution depends on a single threshold: the monthly exemption limit for benefits in kind of 50 euros, as specified in Section 8(2), sentence 11, of the German Income Tax Act (EStG).

The 50-Euro Exemption Threshold and Its Pitfalls

Up to 50 euros per month, the benefit is exempt from taxes and social security contributions. The key term here is “exemption limit,” not “tax-free allowance”: It applies to the total of all non-cash benefits received in a given month—gas vouchers, commuter passes, and supplementary health insurance are all counted together. If this limit is exceeded, the entire amount is taxable, not just the amount exceeding the limit. Anyone who takes full advantage of the limit should therefore be aware of what other non-cash benefits are being provided by the employer.

The Paths Above the Exemption Threshold

Tax-Exempt Benefit in Kind

As long as the contribution remains below the exemption threshold, the employer is only responsible for the contribution itself—without income tax or social security contributions. This is the most favorable scenario and the norm for most budget plans.

Flat-Rate Treatment Under Section 37b of the Income Tax Act (EStG)

The employer taxes the benefit at a flat rate of 30 percent, plus the solidarity surcharge and church tax, and pays the tax. The employee then receives the benefit in full.

Flat-Rate Treatment Under Section 40 of the Income Tax Act (EStG)

Here, a flat-rate calculation is based on an average tax rate approved by the tax office. This method is subject to a maximum amount per employee and requires the submission of an application.

Individual Taxation

The benefit is processed through the employee's payroll and is subject to taxes and social security contributions based on the employee's personal circumstances. Consequently, the employee receives a lower net amount.

Which plan is most cost-effective depends on the annual premium and whether it is in addition to the wages already owed. The calculator displays the plans side by side as soon as the tax parameters are entered; until then, it calculates only the tax-exempt benefit in kind.

Supplementary Health Insurance or a Pay Raise

A salary increase is subject to full social security contributions and taxes for the employee. To ensure the employee receives the same net amount, the employer must spend significantly more than it would for a supplementary health insurance contribution of the same amount—the employer also pays its share of social security contributions. The calculator compares both options based on the same net amount, rather than making an invalid direct comparison between the contribution and the gross increase.

What the computer can do—and what it can't

This is a simplified example calculation provided without warranty. All figures are per year and per employee. The net value of the supplementary health insurance corresponds to the annual budget plus the expected reimbursements for vision care and dental care. A premium waiver is modeled as the expected cost savings for the employer. The tax information provided is not a substitute for tax advice.

Frequently Asked Questions

Is employer-sponsored health insurance tax-free?

Within the monthly exemption limit of 50 euros for non-cash benefits, the payment remains exempt from tax and social security contributions (Section 8(2), Sentence 11 of the Income Tax Act (EStG)). The exemption limit applies to the total of all non-cash benefits received in a given month; if it is exceeded, the entire amount is taxable—not just the portion exceeding the limit.

How much does the supplementary health insurance cost the employer once the 50-euro limit is exceeded?

Above the exemption threshold, the following options may be considered: the flat-rate method under § 37b of the Income Tax Act (EStG) at 30 percent, the flat-rate method under § 40 of the Income Tax Act (EStG) using an approved average tax rate, or individual taxation. Which model is most advantageous depends on the annual contribution and whether it is in addition to the wages already owed.

Is supplemental health insurance worth it compared to a pay raise?

A pay raise is subject to full social security contributions and taxes for the employee. To ensure the employee receives the same net amount, the employer must pay significantly more than they would for a supplementary health insurance contribution of the same amount. The calculator compares both options based on the same net amount.

Sample Calculation

A company pays 50 euros per month per employee into a budget-based supplementary health insurance plan, or 600 euros per year. The contribution remains within the non-taxable limit for non-cash benefits and is therefore exempt from taxes and social security contributions.

• Employer costs for supplementary health insurance: 600 euros per year
• Net value to the employee: 600 euros

The same net amount resulting from a pay raise: With an employee tax rate of 30 percent, this requires a gross salary of approximately 857 euros. Added to this is the employer’s share of social security contributions, which is about 20 percent—bringing the employer’s total cost to approximately 1,030 euros per year.

Result: The same net amount costs approximately 430 euros more per employee per year due to the salary increase. Simplified example calculation provided for illustrative purposes only; actual amounts depend on tax bracket, church tax, and contribution rates.

Sources and Legal Bases

• § 8(2), Sentence 11 of the Income Tax Act (EStG) — monthly exemption limit for non-cash benefits of 50 euros
• § 37b of the Income Tax Act (EStG) — Flat-Rate Income Tax Treatment of Benefits in Kind
• § 40 EStG — Flat-Rate Withholding Tax Based on an Approved Average Tax Rate

The tax rates, exemption thresholds, and maximum amounts used in the system are derived from the tax parameters maintained in FM-Admin and are reviewed and approved before the models are activated. The approval date stored there is the determining factor.