Occupational health insurance – why the topic is booming right now

The shortage of skilled workers in Germany is leading to competition for qualified employees. Almost 60 per cent of German companies describe the shortage of skilled workers as the greatest business risk (Association of German Chambers of Commerce and Industry Business Survey Autumn 2019). And the situation will be further aggravated by the ageing of the population and demographic change. That’s why it is increasingly important to retain qualified employees in the long term. But salary alone is no longer enough to keep employees loyal to a company in the long term. The extra benefits that an employer provides have become significantly more important. These include classics such as capital-forming benefits or a company pension, which can be found in almost every offer of employment. However, the range of extra benefits has now expanded considerably: these days, entitlement to work at home, a subsidy for a sports club or an occupational health insurance policy are included in more and more job offers. The occupational health insurance in particular is an important tool in recruiting new employees.

Facts, figures and data

The demand for occupational health insurance is increasing among both employers and employees, which highlights how important it is for retaining employees. The number of companies offering OHI increased by 355 per cent between 2015 and 2021. In the same period, the number of people who took out an OHI policy increased by 179 per cent (PKV Statistik 20-2015_2021).

What does occupational health insurance mean?

Occupational health insurance is comparable to traditional private supplementary (health) insurance. The idea is to provide additional coverage for a person’s health. The biggest difference between supplementary insurance and OHI is that OHI is concluded as a group insurance policy, whereas supplementary insurance is an individual insurance policy.

An occupational health insurance policy is always taken out through a private health insurance company. An OHI policy is usually offered to companies with five or more employees since it is a group insurance policy. The employer agrees on a desired ‘package’ for its employees and offers it to them or promises it to its employees. Each employee is free to choose whether or not to take advantage of the OHI policy.

Financing options for OHI

There are two different financing options in OHI. If it is exclusively financed by the employer, it is a compulsory OHI policy. If it is financed by the employee, it is an optional OHI policy.

The added value of a compulsory OHI policy is clear to see – the employer pays the contributions for the supplementary insurance of its employees, meaning they have a monetary benefit, unless it is a tax-free payment in kind. The exemption limit for tax-free payments in kind is (since 1 January 2022) capped at a maximum of €50 per month if it is a claim for the insurance benefit. If the exemption limit has already been reached, the taxation can be carried out by the employee within the framework of the individual taxation of the monetary benefit (increase of the gross salary by the contribution of the occupational health insurance) or by the employer within the framework of a lump-sum taxation. For the employer, expenses for the OHI are tax deductible as business expenses.

The advantage of facultative OHI is that the group policy makes the amounts cheaper than in an individual insurance policy (supplementary insurance). This saves the employees insurance premiums for the same benefits. In addition, OHI policies do not require employees to undergo any health assessments, and they even cover ongoing or planned treatments.

The special rates are always linked to the group contracts belonging to the respective company. Should the company change, the premium is changed to an individual policy/supplementary insurance policy, which increases the premium. However, previous insurance periods are taken into account and there is no health assessment.

Many private health insurers also offer family coverage at reduced rates. This means that employees’ relatives can also benefit from the special contributions.

What benefits can be added to an OHI policy?

Private health insurance providers commonly offer similar benefits. Here are a few examples of the most common benefits:

• Additional benefits for outpatient treatment or inpatient rehabilitation or hospitalisation
• Health management in the company
• Alternative practitioner services
• Daily sickness benefit
• Travel health insurance
• Corrective lenses
• Prosthodontics
• Dental care and treatment

These benefits are mostly offered in three different models: the building block model, the budget model and the combination model. These are explained in more detail below.

The building block model

The Lego principle: build the policy you want by choosing from the individual OHI building blocks (benefits). Each benefit has a fixed contribution, which are added together to form the total contribution.

The budget model

In contrast to the building block models, you do not purchase a benefit for a specific area, but instead you have a budget that you are free to use to add any of the components from the range defined for the building block model above. The different budget policies usually only differ in the amount of the budget, which determines the maximum reimbursement sum for the calendar year.

The combination model

A budget model is selected that is supplemented with various building blocks (benefits). This makes it a combination of the budget model and the building block model.

Advantages of OHI

OHI has many advantages for both employees and employers.

Advantages for employers

• Increased attractiveness thanks to additional benefits that can use immediately
• Increase in employee satisfaction and retention
• Reduction in absenteeism due to illness through targeted preventive measures
• Strong argument for employee recruitment
• Improves image (employer brand)
• Costs can be deducted as business expenses

Advantages for employees

• No health assessment, no waiting periods and no exclusions
• Coverage of pre-existing conditions and even ongoing or recommended treatments
• Sensible supplement to statutory and private health care
• Added value that can be used immediately
• Available free of charge for employees (generally) and at reduced rates for relatives

Why are more and more private health insurance providers offering OHI?

Occupational health insurance is becoming more and more interesting for private health insurance providers. OHI offers employers the option of acquiring new customers, leveraging cross-selling potentials and offering OHI to all its employees and their relatives on the basis of trust.

In addition, the amount is easy to calculate thanks to the fixed budgets and there is no negative risk selection due to all employees being covered. This reduces the risk for the insurance provider.

The greatest technical advantage of an OHI policy for the insurance provider is that it can often be processed automatically in a dark process due to its clear specifications. For example, inventory management and benefit calculations processes can be digitally integrated with little administrative effort.

The importance of OHI

OHI is becoming more and more important. For employees, occupational health insurance is the third-most important supplementary staff benefit (after a company pension and capital-forming benefits) and even twice as popular as mobility benefits (such as a company car or public transport pass). Occupational health insurance is even more important to employees than image, thus making it more important than employers assume. This was proven by a study by the Growth from Knowledge Institute (GfK employer/employee survey 2015). OHI is also becoming increasingly important for private insurance providers, too, and is being included in offers with greater regularity. These are reasons for the current OHI boom. It is strongly driven by private health insurance providers and could reach new heights in the next few years. There are also already some insurance providers that are active in occupational long-term care insurance.

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