Are you self-employed but also have a side job in Germany? This is what you should know about health insurance

In Germany, it’s not easy for the self-employed who have a second job as an employee to get health insurance. This means that the health insurance funds have to decide whether such people should be covered by gesetzliche Krankenversicherung (statutory health insurance) or private Krankenversicherung (private health insurance). This article will show you how this works.

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The difficulties of classification
What points to full-time self-employment?
Who qualifies as full-time self-employed?
Full-time self-employed with a part-time job
Full-time self-employment & mini jobs
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Classification for compulsory insurance is often difficult

For a long time, Krankenkassen considered the non-self-employed activity of the self-employed as their main activity. But, nowadays, things have evolved and assessing whether someone is full-time self-employed or not is more nuanced.

It is often not easy to classify a person as an employee or a self-employed person. But this distinction is important because it determines whether the person must have insurance coverage as an employee or is free to take out private health insurance. The distinction is particularly difficult because social insurance law doesn’t provide a legal definition for full-time self-employment. This decision is, therefore, left to the Krankenkassen, each of which has its own criteria for assessing whether insurance is compulsory.

What points to full-time self-employment?

It is often difficult for insurance companies to determine exactly if a self-employed person is full-time self-employed and is therefore obliged to be insured. The main things the Krankenkasse look at are “time spent” and “proportion of income from employment”. In other words, full-time self-employed persons are those whose self-employed activity is the centre of their working life, i.e. the income and effort from the self-employed activity outweigh those from dependent employment. Part-time employment is therefore not as economically relevant to the person as self-employment.

According to the AOK, if the self-employed activity exceeds the employed activity by at least 20% per criterion, it can generally be assumed that the person is self-employed on a full-time basis. However, this 20% is not a fixed value but only a guideline.

Self-employed with employees

If even one person is employed in any capacity, this should not lead to a blanket assumption of full-time self-employment, regardless of the amount of personal work involved. Nevertheless, hiring employees is an indicator of full-time self-employment. In the case of several employees, earnings are added together as a factor for the extent of self-employment.

In the case of self-employed without employees, it is mainly the extent and the income that is used to assess more precisely whether a person is full-time self-employed.

Social benefits for the self-employed

Who qualifies as full-time self-employed?

To be considered full-time self-employed, you must meet one of the following criteria:

You spend more than 30 hours a week working for yourself, and at least 50% of your income comes from working for yourself.
During a work week, you dedicate more than 20 but less than 30 hours per week to freelancing, generating an income of more than half the monthly reference amount for social insurance (i.e. in 2021 this was €1,557.50 for the new federal states & €1,645 for the old federal states).
The time spent on self-employment is below 20 hours per week but the income from it is 75% of the monthly reference amount.

If one of the above criteria applies to you, Krankenkassen will consider you to be full-time self-employed and therefore not subject to compulsory insurance. If you work part-time, you can work up to 20 hours a week and still be considered a full-time self-employed person. Only those who do not meet any of the above criteria are considered to be part-time self-employed.

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Presumption of full-time self-employment

If you’re self-employed and also have a part-time job, the so-called presumption rule applies: for Freiberufler (those working in the liberal professions) and Gewerbetreibende (traders who don’t have a liberal profession) who work at least 20 hours a week on their part-time job and whose earned income is at least 50% of the monthly reference amount, the following rebuttable presumption applies: full-time self-employment is ruled out on the presumption that there’s simply no time left for full-time self-employment.

Conversely, employees who work less than 18 hours per week and whose income is more than half of the monthly reference amount are presumed to be full-time self-employed.

The presumption of full-time self-employment can be (successfully) refuted by self-employed persons if you can prove otherwise.

If the status of full-time self-employment cannot be established based on the above-mentioned criteria or the presumption rule, a so-called overall assessment must be made. An overall assessment compares the economic importance and the time spent on the gainful activities to determine whether the self-employment activity is predominant. Economic importance is tested by comparing the income from self-employment with that from employment.

What happens if I’m full-time self-employed but also a part-time employee?

People who are self-employed on a part-time basis in addition to their main job are generally exempt from statutory insurance. Although full-time self-employed persons are exempt from Sozialversicherung (social insurance), they are not necessarily exempt from Rentenversicherung (pension insurance). Indeed, for some pension insurance may also be compulsory.

For full-time self-employed, it is not possible to switch from private health insurance (private Krankenversicherung) to statutory health insurance (gesetzliche Krankenversicherung) just because of the part-time employment relationship.

Similarly, part-time self-employed who are gainfully employed cannot switch to private health insurance. However, this still has the advantage that they only have to pay other social security contributions as employees.

No more social insurance loopholes

Since health insurance for the self-employed can be more expensive than statutory health insurance, particularly thrifty self-employed have in the past taken up a midi-job (€450.01-1,300 monthly salary) or a similar job just above the marginal earnings threshold. This was mainly to benefit from cheap insurance coverage. By revising the criteria for classifying full-time self-employment, the lawmakers aim to prevent the self-employed from unduly benefiting from reduced insurance coverage. This has led to an exemption from social security contributions by being classified as full-time self-employed.

Full-time self-employment & mini jobs

If you have a mini-job in addition to your full-time self-employment, you should be aware that a mini-job with an employer who used to employ you full-time may look like ‘bogus self-employment’. Be careful, as bogus self-employment is not legal and comes with consequences.

In the case of a mini job alongside self-employment, the employer pays the flat-rate income tax, including church tax and solidarity surcharge. Self-employed persons declare the income from the mini-job in their personal income tax return. For self-employed persons, the mini-job can also be exempt from social security contributions by waiving the obligation to pay pension insurance. This means that the mini-job is also exempt from health, long-term care and unemployment insurance. This makes it easy to supplement self-employed income. This can be particularly advantageous at the beginning of self-employment.