The first thing that surprises payroll teams new to Germany is that the employer does not choose the health insurer. The worker does. A new hire names their Krankenkasse, and that single choice sets who collects the social-insurance money, what the deduction rate is, and which account the payroll run pays every month. If the fund is wrong on the record, every contribution for that employee goes to the wrong place.
Here is how the choice works, what it obliges the employer to do, and how the money is deducted from the payslip.
The worker chooses the fund, and the funds compete on price, not coverage
About nine in ten employees are in the gesetzliche Krankenversicherung (GKV), the statutory system. Within it, the worker freely picks their Krankenkasse: AOK, Techniker Krankenkasse, Barmer, DAK, one of the IKK funds, and dozens more, any fund open in their federal state at their home or workplace (SGB V §173).
The important part for anyone advising on payroll: every GKV fund covers the same legally defined benefits catalogue. A worker does not get more doctors or better treatment by picking one fund over another. What differs is the Zusatzbeitrag, the fund-specific supplementary contribution each Kasse sets in addition to the national rate, plus service and administration. So the choice is really a price choice, and that price is a number payroll has to apply in the deduction.
Once a worker joins a fund, they are bound to it for 12 months, and switching after those 12 months requires two months' notice. The exception matters for payroll: if a fund raises its Zusatzbeitrag, the member gets a Sonderkündigungsrecht, a special right to leave regardless of the binding period (SGB V §175(4)). Funds set that rate at the turn of the year, so January is when most workers switch, and the payroll record has to be updated to match.
Higher earners have one more option. An employee whose gross pay is above the Versicherungspflichtgrenze, €77,400 a year in 2026 (€6,450 a month), may leave the statutory system for private health insurance (private Krankenversicherung, PKV). An employee earning below that threshold must stay in the statutory GKV. Even above it, most employees remain in the GKV rather than switch to private cover.
What the employer has to do
The employer's job starts the moment a worker names their fund. Three obligations follow.
Register the employee with that specific Krankenkasse through the standard social-insurance registration (the DEÜV Meldung). The chosen fund is not just the health insurer. It is the Einzugsstelle, the single collecting agency for the worker's entire social-insurance contribution: health, long-term care, pension, and unemployment all go to that one Kasse, which passes the other branches on. So naming the right fund on the record controls far more than health cover.
If a new hire does not name a fund, the employer cannot simply skip it. The employer must select a Krankenkasse for them (SGB V §175(3)), and the worker is then insured there until they choose differently.
Each month, the employer withholds the employee's share, adds the employer's share, and remits the combined total, the Gesamtsozialversicherungsbeitrag, to the Kasse. Payment is due early: the contribution for a month must reach the fund by the third-to-last banking day of that same month (SGB IV §23), which means payroll often files an estimate and reconciles the small remainder the following month rather than waiting for the exact final figure.
How the deduction is built
Three rates make up the health and care deduction, and each behaves a little differently.
The general GKV rate is 14.6 percent of gross pay, fixed nationally and split evenly, 7.3 percent from the employer and 7.3 percent from the employee (SGB V §241).
The fund's Zusatzbeitrag is added to that. Each Kasse sets its own; the 2026 average is 2.9 percent, up from 2.5 percent, and individual funds range from roughly 2.2 to 4.4 percent. Since 2019 this supplementary rate is also split in half between employer and employee. This is the piece that varies by worker, because it depends on which fund the worker picked.
Long-term care insurance (Pflegeversicherung) is separate, at 3.6 percent in 2026, also shared. Two wrinkles: an employee aged 23 or over with no children pays a surcharge of 0.6 percent that the employer does not match, and employees in Saxony pay a larger share of the care contribution than elsewhere. Both change the employee's net without touching the employer cost.
All of these apply only up to the Beitragsbemessungsgrenze, the contribution ceiling of €5,812.50 a month (€69,750 a year) in 2026. Pay above the ceiling has no further health or care contribution.
A worked example
Take an employee earning €4,000 gross a month, below the ceiling, in a fund charging the average 2.9 percent Zusatzbeitrag. The health deduction alone works out like this:
- General rate 14.6 percent plus Zusatzbeitrag 2.9 percent = 17.5 percent of €4,000 = €700 total.
- Split in half: €350 from the employee, €350 from the employer.
The employee's payslip shows €350 for health insurance; the employer pays a matching €350 as a cost on top of the salary. Care insurance is calculated the same way on the same €4,000 and added separately. Move this worker to a fund charging 4.4 percent instead of 2.9, and the employee share rises to €380 while the general-rate portion stays put. Same salary, different fund, different net pay.
The common mistake: a stale Zusatzbeitrag after a January switch
The recurring mistake is the Zusatzbeitrag, not the fixed 14.6 percent, which rarely changes. A worker switches funds in January under their Sonderkündigungsrecht. The old fund's 2.5 percent rate stays in the payroll record, and for months the deduction is calculated on the wrong number and remitted to the wrong Einzugsstelle. The correction later means recalculated contributions across every affected month and a reconciliation with two different Kassen.
The Zusatzbeitrag is the part that varies. Each fund sets its own Zusatzbeitrag and updates it on a published schedule each January, so the correct rate is different for each employee depending on their fund. Flux holds each worker's current Krankenkasse and its current Zusatzbeitrag and applies them on every payroll run, so the deduction on the payslip is the rate the worker's chosen fund actually charges that month.
Niko Nurmentaus
Product Lead
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