11/16/2020 – Customers who pay their contributions up to three years in advance can claim this from the tax office. A new IVFP computer illustrates how the model works. However, this is only worthwhile for certain target groups and provided that the respective health insurer accepts this route. An overview of the conditions of 25 companies.
Declines in new business in the current corona year mainly hit brokers who focus on the life and health sectors. This was shown by various surveys in the spring (VersicherungsJournal April 28, 2020) and member interviews of the Federal Association of German Insurance Merchants eV (BVK) (7.9.2020, 18.5.2020).
Pointed to an advisory approach for privately insured people who might be interested in well-off customers especially at the end of the year Institute for Pension Provision and Financial Planning GmbH (IVFP).
“In the area of private comprehensive health insurance, the legislature passed an important change in the law in 2020, which further intensifies an already existing effect. This is the advance payment of health insurance contributions, ”writes the institute on its website.
IVFP calculator shows advantage of prepayment
The background: At the beginning of the year, the legislature revised the Citizens Relief Act on Health Insurance (VersicherungsJournal 6.4.2009), which was passed ten years ago.
It records contributions for compulsory health and long-term care insurance as well as premium relief tariffs for old age. Insured persons can now pay this up to three years in advance so that they can be deducted from income tax in unlimited amounts as special expenses in the year of the transfer.
So far were after Section 10 (1) number 3 EStG only two and a half years advance payment acceptable (02/02/2019). This year, a special tax-saving model for those with full health insurance has improved, as emphasized by the IVFP.
So that intermediaries can show customers and interested parties this tax effect on all aspects of private health insurance, the institute has the “KV optimizer“Developed. Part of it is a calculator, which visualizes the determination of the tax advantage when the contributions are paid in advance.
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How the tax saving model works
The tax-saving model for those with full insurance is explained by Association of Private Health Insurance eV (PKV-Verband): “All taxpayers can not only deduct charges for basic health and long-term care insurance, but also for ‘other pension contributions’ from tax.
For the latter, however, there is a maximum limit of 1,900 euros (for employees and civil servants) or 2,800 euros (for self-employed). And only if this framework is not already filled by the contributions to health and long-term care insurance. This means that, as a rule, hardly any other contributions are recognized by the tax office.
If insured persons now pay their private health insurance contributions in advance, they will make full use of the maximum limit in the year in which the advance payment is due. In the following years, however, there is full leeway and can be used for other insurance such as private supplementary insurance. The financial benefit from this approach can amount to several thousand euros. “
The health insurer has to play along
In principle, every insured person can benefit. Employees and pensioners with compulsory insurance are excluded because they do not transfer the premiums themselves. The second requirement is that the health insurer is ready to accept the advance payments. The companies are not obliged to do so.
This is why the VersicherungsJournal editorial team asked 34 private health insurers that offer full insurance tariffs. 25 companies named their terms and conditions, nine companies did not respond. According to the information from the insurance industry, the editors have created an overview (May 22, 2020).
These insurers did not take part in the survey:
Conditions differ significantly
Central and Gothaer, for example, allow unlimited advance payments, but only three annual contributions are tax-relevant. Industry leader Debeka allows advance payments of 36 months, but does not grant a discount.
DKV is one of the few companies that has been offering its policyholders the option of paying premiums in advance since 2011.
Otherwise, the companies accept advance payment of annual contributions between one and three years. It also varies as to whether the companies offer a discount for the contribution payment mentioned and how high it is.
Big discounts when paying in advance
The contributions to the state-sponsored private long-term care insurance (Pflege-Bahr) are generally to be paid monthly. All other rewards can be transferred annually.
A good half of the private health insurers, however, do not show any appreciation for the earlier payment. With some companies this only applies to newer tariffs, while old customers still receive discounts for annual (and sometimes semi-annual) payments.
If a discount is offered, then usually three or four percent on twelve times the monthly fee. This also applies to prepayments for three years.
If you pay in advance for a year, the three or four percent discount corresponds to a return of 6.96 or 9.49 percent. This comparatively high-interest “investment” is independent of the tax-saving model and, insofar as it is offered at all by health insurers, usually also applies to additional policies.
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