Krankengeld

What Is Krankengeld?

Krankengeld, often translated as sickness benefit or sickness allowance, is a fundamental component of Germany's social security system. It represents an income protection benefit paid by statutory health insurance funds to insured individuals who are unable to work due to illness or injury. This falls under the broader financial category of social welfare and public benefits designed to provide financial stability during periods of incapacity. Krankengeld generally kicks in after the initial period of continued salary payment by the employer, ensuring a continued source of income for workers.

History and Origin

The concept of sickness benefits has deep roots in Germany's social welfare history, tracing back to Otto von Bismarck's social legislation in the late 19th century. However, the modern framework for Krankengeld is primarily governed by the Social Code, Book V (Sozialgesetzbuch V, SGB V), which deals with statutory health insurance. The SGB V was introduced by the Health Reform Act of December 20, 1988, consolidating and modernizing existing provisions for health care and sickness benefits.¹⁶, ¹⁷ This act established the comprehensive regulations concerning health insurance and benefits, including the structured payment of Krankengeld, ensuring that individuals received financial support during prolonged illness.

Key Takeaways

• Krankengeld is a statutory sickness benefit in Germany, providing income replacement for individuals unable to work due to illness.
• It is paid by statutory health insurance funds after the employer's initial period of continued wage payment.
• The benefit amount is typically a percentage of the gross income, subject to a maximum limit and contributions.
• The duration of Krankengeld is limited for the same illness, generally up to 78 weeks within a three-year period.
• It plays a crucial role in Germany's social security network, offering financial stability during periods of incapacitation.

Formula and Calculation

Krankengeld is calculated based on the insured person's regular gross income, subject to specific thresholds and deductions. The general formula is:

However, the amount received is capped at 90% of the last net income and is also subject to a statutory maximum amount per day.¹⁴, ¹⁵

Variables:

• Regular Gross Income (per day): This refers to the average daily gross income earned before the onset of illness, typically calculated over the last three months for which contributions were made.¹³
• Statutory Maximum: There is a daily maximum amount of Krankengeld that can be received, which is adjusted periodically. As of 2025, this maximum is €128.63 per day.

¹²It is important to note that Krankengeld is subject to social security contributions for pension and unemployment benefits, but not for health or long-term care insurance.

¹¹## Interpreting the Krankengeld

Krankengeld is interpreted as a critical safety net that bridges the financial gap for employees after their employer's obligation for continued wage payment ends. For most employees in Germany, employers continue to pay their full salary for the first six weeks of an illness. A⁹, ¹⁰fter this period, if the employee remains unable to work due to the same illness, the statutory health insurance fund begins paying Krankengeld. This transition ensures that individuals do not face an abrupt loss of income, allowing them to focus on recovery without immediate financial distress. Understanding the calculation and duration limits is vital for effective financial planning during long-term illness. Individuals with private health insurance typically have different arrangements, often involving "Krankentagegeld" (daily sickness allowance) from their private insurer, rather than Krankengeld from a statutory fund.

Hypothetical Example

Consider Anna, a graphic designer in Germany, who earns a gross monthly salary of €3,000. After an accident, she is unable to work for several months. For the first six weeks, her employer continues to pay her full salary. After these six weeks, her statutory health insurance fund steps in to pay Krankengeld.

1. Calculate Daily Gross Income: Assuming 22 working days per month, Anna's daily gross income is approximately €3,000 / 22 = €136.36.
2. Calculate Krankengeld (70% of Gross): €136.36 * 0.70 = €95.45 per day.
3. Check against Net Income Cap: Assuming Anna's net income was €2,000 per month, or €90.91 per day (€2,000 / 22). Since €95.45 (70% of gross) is higher than 90% of her net income (€90.91 * 0.90 = €81.82), her Krankengeld will be capped at 90% of her net income, which is approximately €81.82 per day.
4. Check against Statutory Maximum: The current daily maximum of €128.63 (as of 2025) is higher than €81.82, so this limit does not affect Anna's benefit.

Therefore, Anna would receive approximately €81.82 per calendar day in Krankengeld, subject to standard payroll deductions for pension and unemployment insurance, for a maximum of 78 weeks within a three-year period for the same illness.

Practical Applications

Krankengeld is a cornerstone of the German statutory insurance system, providing essential financial stability for millions of workers. Its practical applications are numerous:

• Income Replacement: The primary function of Krankengeld is to replace a substantial portion of lost earnings when an employee is incapacitated. This allows individuals to maintain their living standards and meet financial obligations without relying solely on savings or other forms of assistance.
• Healthcare Access: By ensuring continued income, Krankengeld indirectly supports access to necessary medical treatment and rehabilitation, as individuals are not forced to return to work prematurely for financial reasons. This aligns with the broader goals of public health within the social security framework.
• Employer Relief: While employers are responsible for initial wage continuation, Krankengeld shifts the long-term burden of income replacement during extended illnesses to the collective health insurance fund, providing relief for businesses.
• Social Stability: The p⁸rovision of Krankengeld contributes to overall social stability by reducing poverty and hardship that could arise from long-term illness, reinforcing the comprehensive nature of Germany's social security system.

Limitations and Criticisms

Despite its crucial role, Krankengeld, like any comprehensive social benefit, faces certain limitations and criticisms:

• Benefit Cap: While Krankengeld aims to replace income, the 70% of gross income (capped at 90% of net and a statutory maximum) means higher earners may experience a significant drop in their disposable income. This can lead to financial strain for individuals with substantial ongoing expenses or without additional disability insurance.
• "Krankengeldfalle" (Krankengeld Trap): A notable criticism, often termed the "Krankengeldfalle," refers to situations where individuals might inadvertently lose their entitlement to Krankengeld. This can occur if there are gaps in sick leave certifications, especially when changing doctors or during public holidays, potentially leading to a cessation of benefit payments and a difficult transition to other social benefits like unemployment or basic income support. Recent legal changes have aimed⁶, ⁷ to mitigate some of these risks by shifting the burden of timely electronic transmission of sick notes from the insured to the doctors and health insurance funds.
• Bureaucracy and Communica⁵tion: Navigating the rules and requirements for Krankengeld can sometimes be complex, requiring precise communication between the insured, doctors, employers, and the health insurance fund. Misunderstandings or delays can lead to financial disruptions.

Krankengeld vs. Arbeitslosengeld

Krankengeld and Arbeitslosengeld (unemployment benefit) are both income replacement benefits within the German social security system, but they serve distinct purposes and have different eligibility criteria.

Confusion can arise if an individual transitions from being sick to unemployed, or if their long-term illness leads to job loss. The clear distinction lies in the underlying reason for the inability to earn income: illness for Krankengeld, and lack of employment for Arbeitslosengeld.

FAQs

Q: Who is eligible for Krankengeld in Germany?

A: Generally, employees who are members of the statutory health insurance system and are certified by a doctor as unable to work are eligible. It typically applies after their employer has ceased continued wage payment (usually after six weeks).

Q: How long can I receive K⁴rankengeld?

A: You can receive Krankengeld for a maximum of 78 weeks within a three-year period for the same illness. This period includes the initial weeks of wage continuation paid by your employer.

Q: Is Krankengeld taxable?

³A: While Krankengeld itself is generally tax-free, it is subject to what is known as "Progressionseffekt" (progression effect). This means that while the benefit directly is not taxed, it can increase the tax rate applied to your other taxable income.

Q: What happens if I am sti²ll sick after 78 weeks?

A: If you are still unable to work due to the same illness after 78 weeks, your entitlement to Krankengeld ends. At this point, you may need to apply for other social benefits, such as disability insurance benefits (Erwerbsminderungsrente) from the German pension insurance system, or unemployment benefits if you are then deemed fit for work but unemployed.

Q: Can I receive Krankengeld if my child is sick?

A: Yes, under certain conditions, you may be entitled to Krankengeld (Kinderkrankengeld) if you need to take time off work to care for a sick child who is under 12 years old (or disabled and in need of care). The number of days is limited per child and per parent.¹