Company Health Insurance

Employer-sponsored health insurance—or bKV for short—is an employer-funded component of private supplemental health insurance that provides employees with statutory health insurance coverage access to benefits on par with those available to private patients. It is considered one of the most effective employee benefits in Germany and has been in disproportionately high demand for years: Between 2020 and 2024, the number of people covered by bKV rose to over 2.5 million, and the number of participating companies exceeded 56,500.

How supplementary health insurance works from a legal and tax perspective

The employer enters into a group policy with a private health insurer and enrolls its employees in the plan. The employer typically covers the full cost of the insurance premium. For employees with public health insurance, their membership in their health insurance fund remains unchanged—the private health insurance runs in parallel and covers benefits that the public health insurance does not reimburse or reimburses only to a limited extent.

For tax purposes, supplementary health insurance is generally treated as non-cash compensation. Contributions up to the monthly exemption limit of 50 euros are fully exempt from income tax and social security contributions for employees (Section 8(2), Sentence 11 of the Income Tax Act), provided that this exemption limit has not already been exhausted by other forms of non-cash compensation. If the monthly premium is higher, the employer may tax the contributions at a flat rate of 30 percent (Section 37b of the German Income Tax Act (EStG)), which also preserves the net benefit for the employee.

What services are typically covered by a supplementary health insurance plan

Modern supplemental health insurance plans are typically structured as budget plans: Employees receive an annual health budget that they can use flexibly for eligible services. Common budget amounts range from 300 to 1,200 euros per year. Typical covered services include:

  • Dental treatments and dentures, including professional teeth cleaning
  • Vision aids such as eyeglasses and contact lenses, and in some cases laser eye surgery
  • Alternative Medicine Practitioner Services According to the Fee Schedule for Alternative Medicine Practitioners
  • Osteopathy, chiropractic, and other holistic healing methods
  • Advanced preventive health screenings not covered by the statutory health insurance plan
  • Vaccinations not covered by statutory health insurance (e.g., travel vaccinations)
  • Specialist Appointment Service with Guaranteed Same-Day Appointments
  • Assistance services such as caregiving advice, emergency childcare, or hotlines

In addition to basic budget plans, there are modular plans that provide targeted coverage for specific areas of care—such as a dental module, a hospital module offering a single or double room and treatment by a chief physician, or an outpatient module. Many employers combine both options or tier the coverage based on length of service.

Why demand for supplemental health insurance has been rising for years

Three factors have given supplementary health insurance a boost in recent years. First: the shortage of skilled workers. According to the Federal Employment Agency, Germany is short about 800,000 qualified workers, and two-thirds of all employees explicitly want supplementary health insurance—even more than a company car or commuter passes. Second: the growing wait times in the healthcare system. In metropolitan areas, an appointment with a specialist often takes three to six months today; supplementary health insurance shortens that to just a few business days. Third: demographic trends, which make every single employee more valuable and make investments in health economically worthwhile.

Added to this is the tax efficiency: An employer who wants to provide an employee with an additional 50 euros net per month would have to spend around 100 euros on a gross salary increase—with the bKV, 50 euros is sufficient. The difference stays within the company and funds actual health benefits.

Which companies would benefit from a supplementary health insurance plan

Generally, a supplementary health insurance plan is available for companies with three or more participating employees; for some plans, it is available even for a single employee. It is particularly beneficial for companies in industries facing intense competition for skilled workers—such as IT, healthcare, skilled trades, logistics, and manufacturing—as well as for companies that want to actively build their employer brand.

The onboarding process typically takes two to four weeks from the decision to the start of active coverage. With well-designed plans, the administrative workload after onboarding is less than one hour per month. The usage rate—that is, the percentage of employees who actively access the budget—varies greatly depending on the provider and the quality of communication: industry averages range from 15 to 52 percent, while well-communicated supplementary health insurance plans reach 60 to 70 percent.

FAKTOR MENSCH : The utilization rate is the true indicator of success for a supplementary health insurance plan—not the number of policies issued. We regularly see companies operating their supplementary health insurance plans for years with a utilization rate of just 15 to 20 percent because their activation communications remain a one-time event. Our experience: Only through annual activation campaigns, digital onboarding, and targeted benefit communications for specific occasions (dental care in January, vision aids in the spring) does utilization consistently rise above 50 percent. That’s when the supplemental health insurance becomes a real benefit.

Distinction from private health insurance and private supplemental health insurance

The bKV is not a private comprehensive health insurance plan: Employees remain members of their statutory health insurance plan. Nor is it an individual supplemental health insurance plan that employees would have to purchase privately—the bKV operates as a group policy, involves no medical underwriting or waiting periods, and often offers more favorable terms than comparable individual policies. When leaving the company, employees can generally transfer their bKV coverage to an individual policy with the same insurer without a new medical exam—meaning they do not lose their coverage when they change employers.

Unlike traditional employee benefits such as company bicycles, commuter passes, or gift cards, the bKV stands out for its health-focused approach: it directly impacts absenteeism, access to specialists, and health coverage for the family. In surveys, employees who receive bKV regularly cite two benefits that other perks do not provide: a sense of appreciation because the employer is investing in their health, and a measurable reduction in financial uncertainty in the event of sudden healthcare costs.

Conclusion

In its current form, employer-sponsored health insurance is a highly efficient component of modern human resources policy: it offers tax incentives, has a streamlined administrative structure, takes effect immediately, and is accessible to the entire workforce. However, its value does not materialize automatically upon signing the contract, but rather through active use by employees—and this adoption is the real operational challenge following implementation.

Related terms

Health screening
A medical examination is the standard process by which an insurer asks about pre-existing conditions before a contract is signed. In bKV group policies, this is generally not required—all employees are eligible for coverage without having to answer medical questions, even if they have pre-existing conditions.
Health screening
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Waiting time
The waiting period is the time after the policy takes effect during which no benefits are paid out. In modern budget-based supplementary health insurance plans, this waiting period is usually eliminated entirely—employees can use the budget starting on the first day of coverage.
Waiting time
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Non-cash benefit (50-euro limit)
The tax-free benefit in kind under Section 8(2), sentence 11 of the German Income Tax Act (EStG) allows employers to provide employees with up to 50 euros per month free of tax and social security contributions. The supplementary health insurance premium is one of the most common uses of this provision.
Non-cash benefit (50-euro limit)
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Flat-rate taxation
The flat-rate taxation provision under Section 37b of the German Income Tax Act (EStG) allows employers to tax non-cash benefits provided to employees at a flat rate of 30 percent. For supplementary health insurance premiums exceeding 50 euros per month, this is the standard approach to ensuring that the benefit remains net-neutral for employees.
Flat-rate taxation
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Group contract
A group policy covers multiple insured individuals under a single insurance contract with more favorable terms. In supplementary health insurance (bKV), the group policy is the standard structure: the employer is the policyholder, and the employees are the insured individuals.
Group contract
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Family Plan
The Family Option allows family members—usually a spouse and children—to be covered under the employee’s supplementary health insurance plan. Depending on the provider and plan, coverage may be fully funded by the employer, partially funded, or available as a self-pay option.
Family Plan
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Utilization rate
The utilization rate describes the percentage of employees eligible for the company health budget who actually make active use of it within a year. Industry averages range from 15 to 52 percent—well-communicated programs reach 60 to 70 percent.
Utilization rate
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Employer contribution
The employer contribution refers to the employer’s financial contribution toward the supplementary health insurance premium. In most supplementary health insurance plans, the employer covers 100 percent of the premium; hybrid models that include an employee copayment are more complex from both an operational and a tax perspective.
Employer contribution
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Related terms

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