Working Life > Social Insurance

Statutory Social Insurance

Definition, Explanation

Tips, Checklist

Definition, Explanation

The German statutory social insurance is constituted in Viertes Buch des Sozialgesetzbuchs and is in essence an obligatory insurance. It serves the principle of mutual solidarity, providing citizens with financial protection in unemployment, sickness, need of nursing care, work accidents and in old age. Accordingly, it is composed out of different insurances whose carriers are corporations under public law. Those include:

• Statutory health insurance by the health funds
• Statutory pension insurance by German pension insurance
• Accident insurance by the workers' compensation insurance carriers associations
• Unemployment insurance by the Federal labour agency
• Nursing-care insurance by the health funds

The financing is not done via tax, rather via contributions paid by employers and employees that consist in percentages of the net income. The exception is the accident insurance which is paid completely by the employer to the respective worker's compensation insurance carriers association. Other than that, the social insurance contributions are usually paid a half each by the employer and the employee (except health insurance for which the employee pays 50.45 percent). The contributions are directly retained as shares of the employees' incomes and are deducted by the employer to the respective health funds. The health funds, in turn, pass on the respective shares to the pension insurance and to the Federal labour agency.

The amount of the contributions are determined, for the health- and accident insurance, by the respective insurance administration, and for pension-, unemployment- and nursing care insurance by legislation. In the insurances administration, there are elected honorary representatives of the insured and of the employers, in the so-called social-election, who will contribute to carrying out the tasks of the social insurance carriers.

The insurances are obligated to accept a person who is obligated to be insured as a member, independently of the person's state of health. Members in social insurance usually are employees. Self-employed are freed from the obligation to be insured. Their alternative way is to be insured in private health-, pension- and working-inability-insurance. Detailed information on the insured, the contributions and the benefits can be found on the pages about the respective insurances (see above).

The benefits of social insurance are as well composed out of the benefits of the insurance carriers:

• Employment promotion and basic security for persons looking for work by the Federal labour agency
• Health promotion, benefits for the prevention of diseases, early diagnosis of diseases, benefits during sickness, pregnancy and maternity, by the health funds
• Prevention, rehabilitation and compensation payments related to work accidents and occupational diseases by the accident insurance
• Benefits enabling participation in working life, old-age pensions and pensions for reduced earning capacity by the pension insurance
• Aids in cases of need of nursing care by the nursing care insurance

For mini-jobbers and for short-term employments, that is activities of fewer than 50 work days, respective fewer than 2 months, per year, there are special regulations.

A special form of social insurance is the artists social insurance which is financed by the contributions of self-employed artists and publicists as well as by the artists social insurance contribution paid by the commissioning companies.

Tips, Checklist

Employers:

• As an employer, you are responsible for the enployee's registry in the insurances, and you must retain the insurance contributions when paying the income and deduct them together with your employer's contribution to the responsible health insurance
• Until the 15th day of the following month, social insurance contributions should have been paid. If they have not, an additional delay-fee will be due
• If you have problems financing your employee's insurances, you should agree a deferment of payment with the health insurance. Get detailed information on interest payment and conditions of a deferment from the respective health insurance

Employee:

• Make sure that the obligatory contributions to social insurance are paid, and there are no interruptions in the contribution-payments, and that your data is up-to-date
• Think whether your insurance benefits are sufficient, or you want to get insured in a private insurance, additionally, e.g. in a complement-health-insurance

Last update: 12/27/2009