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Private health insurance suffers from low interest rates - massive premium increases

2020-10-31T15:50:50.184Z


Nobody wants a letter like this: Debeka charges almost 18 percent surcharge on health insurance. The reason is the retirement reserves. Other providers will soon follow suit.


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Hospital beds for private patients: Private health insurance is always a savings contract for old age

Photo: imago images / imagebroker

The customers of private health insurers are currently experiencing a price shock.

And it exposes a weakness in the system.

If interest rates stay as low as they are now, all those with private health insurance will soon have to pay a lot more month after month.

The self-employed and employees among the 8.7 million privately insured are particularly affected.

Government aid, on the other hand, protects civil servants and retirees from excessive hardship.

One or the other insurer has already increased.

Now the almost two and a half million policyholders are caught by the market leader Debeka.

Actually, an insurance policy with which you have little trouble.

The monthly price increases in one fell swoop by an average of 17.6 percent - a little less for some, a little more for others.

Such an increase often amounts to 100 euros a month for a 50-year-old self-employed person or employee, because private health insurance at Debeka costs well over 500 euros a month on average.

For civil servants and retirees, who make up the majority of the customers with health insurance in Debeka, 18 percent is also a lot of money.

Even after decades, insurance cover costs only 230 to 240 euros per month on average.

The increase therefore "only" costs a good 40 euros.

The reason: civil servants and pensioners only have to insure part of the medical and hospital costs.

Before the insurance is taken out, the employer, i.e. the federal government or the state, pays a large part of the doctor's bill with the so-called allowance.

Insurance is only required for the rest.

18 percent.

How does such a murder increase come about?

Debeka gives two reasons: On the one hand, the costs of medical treatment have risen regularly in recent years.

But because the rules of private health insurance provide that the contribution may only be increased if the costs have increased by at least five percent, the contributions have not been allowed to increase since 2017.

For the monster increase, another component of the contribution calculation comes into play.

And that is crucial: private health insurance is always a savings contract for old age.

At a young age, customers pay more with their contributions than is necessary for the medical expenses, the insurer invests the money - and sets up retirement provisions.

With the capital invested, the health insurer tries to generate the highest possible return.

The return then helps that the contributions do not increase so much in old age.

Imaginary savings account

For decades, health insurers, including Debeka, have calculated an interest rate of 3.5 percent per year in this model.

That's how much the reserves should bring in.

But it has long been a long time since it was possible to generate such returns with a safe investment.

And now that the treatment costs are increasing significantly, Debeka has also adjusted the sample calculation for the interest.

Instead of 3.5 or 3.2 percent as it was last in 2017, Debeka only expects an interest rate of 2.3 percent in the future.

The result: A lot of money is missing in the fund for old age.

That makes up the lion's share of the 18 percent increase.

To do this using the example: A 50-year-old already has 20,000 euros in his imaginary savings account with the insurance company and should pay an average of 1,000 euros every year until he retires at 65.

In the end, at 3.2 percent interest, 51,500 euros would then be in the account as an old-age reserve.

In order to get the same amount at 2.3 percent interest, the insurance customer would have to pay 1,300 euros every year - 25 euros more every month, just because of the low interest rates.

What can customers do now?

Changing insurers is not an option for contracts concluded before 2009.

They would lose their retirement reserves if they switched (as a gift to the remaining customers of the old insurance).

The new insurance would therefore become significantly more expensive in old age.

The mean thing: It is precisely these old contracts that are particularly hard hit by the premium increases.

But changing insurance often makes little sense, even for those with short-term insurance: they also lose part of their retirement reserves when they change.

In addition, all insurers face the same problem with low interest rates.

Change the tariff?

Insured persons can still switch - if they stay with their insurer at the same time.

The insurance companies usually have a whole range of tariffs with different conditions on offer, maybe there is something cheaper?

Actually, the insurers even have to help their customers with suggestions as to which of their tariff offers would be cheaper.

So far this has worked more badly than well.

No wonder: which insurance salesman is interested in it?

Unfortunately, that doesn't help that much at Debeka.

The insurer is known for not offering many different tariffs.

"For tariffs that are perceived as expensive within the Debeka there are no significantly cheaper tariffs that customers can use for worthwhile tariff changes," says Nicola Ferrarese of the tariff change specialist Minerva.

For many other private individuals, however, changing tariffs is an effective means.

Nobody should be mistaken: sooner or later the interest rate epidemic will affect them all.

Hallesche Versicherung has also announced an increase on January 1st.

The Bavarian Insurance Chamber writes that an increase must take place for around half of the insured every year. 

Back to the legal?

To flee to the statutory health insurance is legally allowed for insured persons up to the age of 55.

It makes no economic sense for civil servants and retirees because they lose state aid.

Debeka therefore has little to contend with with such insurance flight.

Four out of five of their fully insured customers are civil servants and pensioners with no real incentive to flee.

That would often be attractive for the others.

Especially for the many small, privately insured self-employed.

For them, the hefty premium increase comes at an inopportune time anyway: In the current corona crisis with several shutdowns, they are particularly suffering.

And then there will be elections in 2021.

The Debeka is the flagship of private health insurance.

One in four privately insured persons is with Debeka.

Lots of people with health insurance in need because the premiums for the industry leader are rising too quickly, that's not a nice topic for supporters of the previous parallel system of statutory and private health insurance.

And a starting point for those who would like to get rid of private life.

Debeka therefore decided on the spur of the moment to extend the premium increase for some customers.

Instead of a surcharge of 18 percent at a time, the insured employees and self-employed with the more expensive contracts in 2021 will initially have to bear "only" 60 percent of the increase.

The remaining 40 percent of the increase will then be added in early 2022.

Does that help?

Icon: The mirror

Source: spiegel

All business articles on 2020-10-31

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