Business Expense

Expenses related to a company health insurance plan reduce the company’s profit. This applies to the insurance premiums themselves and, depending on the chosen model, also to the taxes and social security contributions paid by the employer. It is the least controversial part of the company health insurance system—and, at the same time, the one most frequently omitted from profitability analyses.

Regardless of the exemption limit

A common misconception is the assumption that the deduction is limited for amounts over 50 euros. That is not the case.

The 50-euro exemption limit determines how the benefit is treated for the employee —not whether the company can deduct the costs. Even a supplementary health insurance plan with a monthly premium of 80 euros remains fully deductible as a business expense. These two issues are on different levels and do not affect one another.

What Should Be Taken Into Account

• Insurance Premiums
• Any service fee for managing the contract
• Taxes Paid by the Employer for Flat-Rate Options
• In the case of net wage taxation, the employer's share of social security contributions is also included
• For all options, the employer's statutory contribution, if applicable

Anyone who only includes the premium and forgets to account for the deducted taxes is effectively signing off on the deduction—and making the bKV appear more expensive in the internal calculations than it actually is.

Why this affects the choice of model

Tax deductibility puts the cost differences between the four tax models into perspective, but it does not eliminate them. A variant that is one-third more expensive before tax remains more expensive afterward—only the gap narrows.

Consistency is key: When comparing the different scenarios, the analysis should be conducted consistently at a single level—either entirely before or entirely after tax effects. Mixing calculation methods regularly leads to incorrect rankings—not randomly, but systematically in favor of the scenario that happened to be calculated after tax effects.

The comparison with a pay raise

The same principle applies when comparing this to a pay raise: In that case as well, the expenses are deductible, including payroll-related costs.

If you apply the deduction to only one side, you distort the result—in either direction, depending on which side is given preferential treatment. A reliable comparison pits the two alternatives against each other on either a gross or net basis.

Practical Implementation

The specific posting and allocation to the appropriate accounts varies depending on the selected tax model and must be coordinated with the accounting department. In particular, it must be clarified how the service fee is treated and whether the flat-rate tax paid is recorded as a separate line item.

It's worth coordinating this before implementation, as it will save you from having to make corrections later in the ongoing billing process.

Conclusion

The deduction for business expenses applies regardless of the contribution amount or tax model. It must be included in every cost-benefit analysis—otherwise, the bKV will consistently appear too expensive compared to alternatives and will be rejected for the wrong reason.

This article provides a general overview and is not a substitute for tax advice in specific cases.