What does German health insurance deduct from a lump-sum company pension payout?
In short
What does German health insurance deduct from a lump-sum company pension payout? Your health insurance fund (Krankenkasse) divides the lump sum by 120 and charges health and long-term care contributions on it for ten years, as if it were a monthly pension. In 2026, EUR 197.75 a month stays free for compulsorily insured pensioners. On EUR 36,000 that is about EUR 29 a month, roughly EUR 3,400 in total.
Health and long-term care contributions in 2026 on a lump sum, compulsorily insured in retirement, with children, average additional contribution 2.9 percent, no other company pensions.
Example
Typical range
Lump sum EUR 20,000
EUR 0, the monthly amount is below EUR 197.75
Lump sum EUR 36,000
about EUR 28.70 a month, roughly EUR 3,440 over ten years
Lump sum EUR 80,000
about EUR 106 a month, roughly EUR 12,730 over ten years
Lump sum EUR 100,000
about EUR 141 a month, roughly EUR 16,950 over ten years
Lump sum EUR 36,000, voluntary member
about EUR 61 to 64 a month, roughly EUR 7,400 to 7,600
Our own calculation with 14.6 percent plus 2.9 percent additional contribution on the part above
EUR 197.75 and 3.6 percent care contribution on the full monthly amount.
Without children, care is 4.2 percent.
Your fund may charge a different additional contribution,
and the allowance and rates change every year.
Worked example
Direktversicherung, EUR 36,000 lump sum, compulsorily insured, two children
How the health insurance fund converts the lump-sum company pension into a monthly amount in 2026.
Lump sum
EUR 36,000.00
Monthly amount (36,000 divided by 120)
EUR 300.00
Health 17.5 percent on EUR 102.25
EUR 17.89
Long-term care 3.6 percent on EUR 300
EUR 10.80
Contribution per month
EUR 28.69
Over 120 months
EUR 3,442.80
Of EUR 36,000, about EUR 3,440 goes to health and care insurance, roughly 9.6 percent, spread over ten years. As a voluntary member without the allowance it would be over EUR 7,400.
The 120-month rule in plain words
If you take a company pension (betriebliche Altersversorgung) such as a Direktversicherung or Pensionskasse as a lump sum, your statutory health insurance fund still treats it as a pension payment (Versorgungsbezug). Under section 229 of Social Code Book V (SGB V), one 120th of the lump sum counts as a monthly pension for at most 120 months, so ten years.
This applies even if a lump sum was agreed from the start and no pension was ever planned. You do not lose the money in one go. The fund sets a monthly contribution that you pay for ten years, usually by direct debit.
Lump sum
Monthly amount (1/120)
Contribution per month, compulsorily insured
Total over 10 years
EUR 20,000
EUR 166.67
EUR 0, below the threshold
EUR 0
EUR 36,000
EUR 300.00
about EUR 28.70
about EUR 3,440
EUR 60,000
EUR 500.00
about EUR 70.90
about EUR 8,510
EUR 80,000
EUR 666.67
about EUR 106.10
about EUR 12,730
EUR 100,000
EUR 833.33
about EUR 141.20
about EUR 16,950
Allowance versus threshold
For health insurance, the fund deducts an allowance (Freibetrag) of EUR 197.75 from the monthly amount in 2026 if you are compulsorily insured. You only pay on the rest. For long-term care insurance (Pflegeversicherung) the same figure is only a threshold: if the 120th is above it, the full amount counts from the first euro.
The figure is one twentieth of the monthly reference value of German social insurance and usually rises every year. If you also receive a regular company pension, both are added together, and the allowance applies only once.
Compulsory, voluntary or private cover
You are compulsorily insured in retirement (Krankenversicherung der Rentner) if you were in statutory health insurance for at least nine tenths of the second half of your working life. Only then does the allowance apply to a lump-sum company pension. Expats who arrived late in their careers often miss this nine-tenths rule.
Voluntary members pay on the full 120th, without an allowance. For EUR 36,000 that is about EUR 61 to 64 a month, depending on the rate. If you have private health insurance, no fund takes anything from the lump sum and your premium stays the same.
Which parts stay contribution-free
If you took over a Direktversicherung or Pensionskasse as policyholder after leaving an employer and kept paying from your own money, the part built from those payments is exempt under section 229 SGB V. Ask the provider for a breakdown and send it to your fund.
Riester-subsidised company pensions are also exempt. Paying contributions out of taxed salary while the employer remained policyholder does not help: what counts is who held the policy.
When contributions start and end
The ten years start the month after the payout, not when your state pension begins. If you are still working, the monthly amount is added to your salary, up to the contribution ceiling of EUR 5,812.50 a month in 2026. If you already earn above that, the lump sum adds nothing.
Contributions end after 120 months or on death. The amount can change during this time because the allowance, the additional contribution and the care rate are reset each year.
Pension or lump sum: the health insurance view
For your health insurance fund it hardly matters whether you choose a pension or a lump sum: you pay contributions either way. With a lump sum they stop after ten years; with a pension they run for life. If you live long, a pension costs more in total contributions.
The bigger difference is usually income tax, which falls on a lump sum in the year of payout. This page covers only health and care contributions; tax is explained on our page about tax and social contributions on a company pension.
Step by step
Find out whether you will be compulsorily, voluntarily or privately insured in retirement.
Divide the lump sum by 120 and add any regular company pensions.
Deduct the EUR 197.75 allowance for health, and check the care threshold.
Ask the provider to certify which part comes from privately paid contributions.
Send that certificate to your fund before the assessment arrives.
Check the assessment and budget for ten years of contributions.
Checklist
Status in pensioners' health insurance clarified
All company pensions and lump sums added up
Privately paid parts documented
Riester-subsidised parts shown separately
Proof of children sent to the care insurer
Assessment checked for the allowance
Common mistakes
Assuming a lump sum is free of health insurance contributions
Applying the EUR 197.75 allowance to long-term care as well
Not documenting privately paid contributions
Expecting contributions only from retirement, although they start after payout
Spending the whole lump sum and forgetting ten years of contributions
Questions and answers
Frequently asked
Do I have to report the lump sum to my health insurance fund myself?
The insurer or Pensionskasse reports it to your fund as the paying body.
You should still document privately paid parts and your children yourself.
Does the amount change over the ten years?
Slightly.
The allowance is one twentieth of the reference value and usually rises each year,
and the additional contribution and care rate can also change.
What happens if I die before the ten years are over?
Contributions end on death.
Your heirs do not pay the outstanding months.
Do I pay if I am still working?
Yes, the monthly amount is added to your salary,
but only up to the contribution ceiling of EUR 5,812.50 a month in 2026.
Does the year of payout matter for health insurance?
Hardly, contributions run for ten years either way.
