Requirement of Additionality

The “additionality” requirement stipulates that a benefit must actually be provided in addition to the wages that are already owed. It is one of the conditions on which tax benefits depend—and one of the points where well-intentioned arrangements often fall short.

Which also means

The benefit must be provided in addition to the employee’s existing entitlement to compensation. If, instead, the employee’s existing salary is converted—that is, the employee forgoes a portion of their salary and receives the benefit in kind in exchange—the requirement is not met.

Nor is it sufficient to reclassify an increase that has already been approved as a benefit in kind or to simply rename an existing benefit.

Why this is relevant to the bKV

In employer-sponsored supplemental health insurance, this requirement is usually not a problem: The employer provides the benefit as an additional perk, without deducting it from the employee’s salary. However, it becomes an issue in three scenarios:

• Deferred Compensation: The supplementary health insurance plan is to be funded through a salary deferral.
• Reallocation of a raise: Instead of the promised salary adjustment, employees receive the bKV.
• Replacement of Existing Benefits: An existing benefit will be discontinued and replaced by the bKV.

In all three cases, it must be determined in advance whether the intended tax treatment is even viable.

The Relationship with the Taxation Options

This requirement does not apply equally to all variants. It is therefore one of the factors that should be considered in conjunction with the choice of tax model—not after the fact. The specific consequences in any given case should be discussed with the payroll department or a tax advisor.

Practical Protection

The supplementary nature of the benefit should be documented—in the benefit plan and, where necessary, in the individual approval. The documentation should make it clear that no component of the compensation has been omitted and that the benefit is provided in addition to existing entitlements.

That is the difference between an arrangement that holds up in court and one based on a verbal agreement.

What to Look Out For

• Is a component of compensation excluded from the supplementary health insurance (bKV)? If so, the principle of additionality is at risk.
• Will a promised raise be replaced? Same problem.
• Is the commitment documented in writing?
• Was the arrangement discussed with the payroll department before it was communicated?

Conclusion

The "additionality" requirement is rarely an obstacle if the supplemental health insurance is intended—as it usually is—to be an additional benefit. It becomes a problem as soon as it is used as a substitute for something else. This decision is made during the design phase, not during billing.

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