Participating in the German social security system is largely compulsory. Contributions are based on your income and are automatically deducted from your gross salary if you are an employee. Most self-employed people also have to contribute financially to various insurance funds. Of course, nearly everybody is entitled to social benefits as well. For less serious illnesses, for example colds or headaches, you can buy medication directly from the pharmacy. The people working there can also advise you.
Visiting a doctor
If you are seriously ill and would like to go to a doctor, you must first go to the Sozialamt (social services department), where you will get a special Krankenschein (health insurance certificate). You can then go to a doctor with this certificate. The Sozialamt (social services department) pays for the doctor’s appointment and medication. In order to obtain stronger medication, the doctor will give you a Rezept (prescription) which you then take to the pharmacy.
For example, expatriate families in Germany may apply for a child allowance (Kindergeld) from the government. If they accumulate retirement benefits by working in Germany for a longer period, they can receive those when retiring abroad. Generally speaking, whoever contributes to the German benefit system receives financial benefits, at least after a certain waiting period.
Various Types of Social Security
The German social security system is organized in a somewhat haphazard fashion. The welfare system was obviously not designed from scratch, but has grown over a period of more than 125 years. Generally, there are three categories of benefit funds: funds paid solely by the employer, welfare funds where employer and employee share the costs, and tax-based benefits.
The most important fund in this category is work-related accident insurance (Unfallversicherung). The coverage extends to work-related illnesses and to accidents which happen on your way to or from work. All resulting disabilities, however, are covered by a separate fund (Münder/ Ernst 2009).
Benefits Shared by Employers and Employees
The most expensive parts of the German system, healthcare and pension insurance (Rentenversicherung) with their considerable financial burden, are shared between employer and employee. All employees contribute 9.45% of their gross income to the retirement and pension fund. Health insurance follows with 7.3% and nursing care with 1.025%. Your employer contributes roughly the same amount.
Unless you are self-employed, these social security contributions are automatically deducted from your salary or wages every month. The amount that was deducted from your gross salary will be recorded on your pay slip. Depending on how long you contribute to the fund, you should receive up to 67% of your average net income as a pension when you retire. The legal retirement age in Germany is now 67 years.
Since the topic of health insurance (including nursing care for the elderly) is complex, we’d like to refer you to the article on health insurance in Germany.
Unemployment Insurance in Germany
Social security in Germany also provides for unemployment insurance (Arbeitslosenversicherung), to which both the employer and the employee contribute 1.5% of the employee’s gross income. Unemployment compensation is a combination of subsistence allowance and contribution-based claims. You will receive about 60% of your previous net income for a period of six to 24 months of unemployment.
After this period of up to two years, everybody receives welfare aid (ALG II or Hartz IV, as it is more widely known), a standardized subsistence allowance. A condition for receiving this allowance is your willingness to accept all job offers, even low paid ones or menial tasks. Since its introduction in 2005, Hartz IV has drawn a lot of criticism and sparked plenty of debates.
Social Security Benefits for Families
The most important tax-financed benefits within the German social security system are the child allowance (Kindergeld), maternity benefits (Mutterschaftsgeld), and student loans for universities in Germany (Bafög).
The child allowance is of interest to expat families. After living in Germany for 12 months, every resident can apply for it at the local employment agency (Arbeitsamt). Parents receive between EUR 184 and EUR 215 per month for each child. Even children between 18 and 25 years of age can still receive this kind of allowance if they attend school or university. In order to apply for the child allowance, you need your residence permit, your local registration certificate, an application form, and your children’s birth certificates.
Germany has many laws to protect pregnant women and new mothers. Expecting mothers have the right to temporarily stay home from work for six weeks before childbirth. They are forbidden to work for eight weeks after childbirth. (If you are having twins or if your baby was born prematurely, you may stay at home for three months after giving birth.) An expecting mother only has to inform her employer, and she’ll be put on paid maternity leave.