Monetary Benefit

A monetary benefit is the general term for anything that employees receive in addition to their salary and that has economic value. The employer’s contribution to supplementary health insurance is included in this—and this is where the tax considerations begin.

Two questions determine the course of treatment

First: In-kind or cash compensation? If the employee receives only insurance coverage without the option of a cash payout, this constitutes in-kind compensation. Only then can a tax benefit be considered. The prerequisite is that the employer is the policyholder and pays the premium directly to the insurer.

Second: within or outside the exemption limit? If the total value of all non-cash benefits in a given month does not exceed 50 euros, the benefit in kind is exempt from tax and social security contributions. Above that amount, one of the four taxation models applies.

Both questions must be answered one after the other. Anyone who fails the first one will not even get to the second—in which case, the exemption limit is irrelevant.

What Counts

To determine the exemption limit, all non-cash benefits in kind received in a given month are added together—not just the supplementary health insurance benefits:

• Gift cards and prepaid cards
• Gas vouchers and designated-purpose vouchers
• Gift certificates and similar benefits in kind
• Job ticket, unless it is tax-exempt on its own

Here's an example: A supplementary health insurance plan with a monthly premium of 40 euros plus a benefits card worth 50 euros totals 90 euros. The limit has been exceeded—for both benefits combined, even though each one individually would be below the limit.

Anyone who is enrolled in multiple benefits at the same time should understand how they interact before adding another benefit. This assessment should take place before deciding on a plan.

Assessment of the Benefit

With supplementary health insurance (bKV), the assessment is relatively simple: what matters is the amount the employer contributes—not the value of the benefits the employee actually uses. Someone who doesn’t submit any claims in a given year receives the same monetary benefit as someone who uses up their entire budget.

It also follows that it is not the size of the health care budget that matters, but rather the monthly premium. The two are often confused, even though the amounts differ significantly.

Distinction from Tax-Exempt Benefits

Not every fringe benefit constitutes a monetary benefit in the sense intended here. Certain benefits are exempt from tax on their own and do not count toward the exemption limit—meaning they are available in addition to the exemption.

Which ones these are in a specific case should be clarified with the payroll department. This distinction determines how much leeway actually remains below the 50-euro threshold—and thus whether a supplementary health insurance plan can remain tax-free or not.

Conclusion

The monetary benefit is the starting point for any tax issue related to supplemental health insurance. Only after classifying it as non-cash compensation and checking the exemption limit can one determine whether and how it must be taxed. Both steps can be clarified in advance—and that is precisely what distinguishes a planned implementation from one that results in surprises on the first pay stub.

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