For tax purposes, it can be advantageous to pay private health insurance contributions in advance in order to reduce the tax burden. We explain why and what you have to consider when paying a contribution.

According to § 10 (2) sentence 1 EStG, pension expenses are deductible as special expenses. Precautionary expenses include expenses relating to pensions, sickness, long-term care and other life risks, such as unemployment, occupational and occupational capacity, accidents and liability for damages.

Contributions to health insurance are deductible according to § 10 (1) no. 3 sentence 1 letter a EStG as special expenses. Health insurance contributions are contributions for statutory and private health insurance.

However, § 10 (1) no. 3 sentence 1 letter a EStG only includes contributions to basic insurance. This includes contributions to the attainment of a level of social assistance equivalent determined by the SGB XII, provided that the benefits are eligible. Contributions must therefore be necessary for the minimum level of coverage, the so-called principle of necessity of contributions.

Contributions beyond this – i.e. those that cover an additional need – are therefore only deductible under the regulation in § 10 (1) sentence 1 number 3a EStG. Such contributions include, for example, contributions for elective and supplementary tariffs. The differentiation between the basic supply and the beyond is relevant for determining the level of deductibility. We will discuss this further under 1.3.

Contributions to basic insurance, i.e. those within the meaning of § 10 (1) no. 3 EStG, are deductible in full. The maximum amount regulation was suspended for health insurance and long-term care insurance according to § 10 (4) sentence 4 EStG. Otherwise, the deductibility is limited to 1900 euros for employees and pensioners and to 2800 euros for self-employed persons (§ 10 (4) sentence 1, 2 EStG). This restriction has the consequence that pension expenses within the meaning of § 10 (1) no. 3a EStG – i.e. those of the additional care – are not deductible if the basic insurance – as regularly – exceeds the maximum amounts. As a rule, you cannot deduct additional contributions from the tax. But you can avoid this by a contribution advance payment.

Taxpayers who are privately insured can prepay health insurance contributions. For these contributions, the maximum amount regulation of § 10 (4) sentence 1 EStG does not apply, so that all contributions in the year of payment are deductible. The positive effect now lies in the fact that in the following years the contributions of the additional provision according to § 1 (1) no. 3a) EStG can be deducted in full up to an amount of 1,900 euros or up to 2800 euros. This includes, for example, contributions for a term life insurance or occupational disability insurance.

The maximum amount would already be used up by the basic health insurance without the advance payment. Since no health insurance contributions are paid in the years due to the advance payments, the full maximum amount is available.

The legislator has also recognized this design possibility and therefore regulated restrictions in § 10 paragraph 1 no. 3 sentence 5 EStG. Accordingly, the advance payment of contributions for insurances within the meaning of § 10 (1) no. 3 sentence 5 EStG is excluded from the deduction at the time of the assessment if they are paid for contribution years starting after the expiry of the assessment date and exceed in total 3 times the contributions attributable to the assessment period.

In addition, you have to make the advance payments by mid-December so that they are really allocated to the current year for tax purposes. Otherwise, contributions will be added to the following year from 22.12.

Due to the advance payment for private health insurance, you are entitled to the full maximum amount for care expenses in the following years. As a result, you can, for example, claim your disability insurance or life insurance for tax in the following years and easily save a thousand euros in taxes in the following years. It should be noted, however, that you only pay contributions for up to three years and make the payments before 22.12.