Are You Self-Employed or an Employee?

Some people are just employees – and that is that! Some are self-employed or freelancers! That is that!

BUT there´s a long existing dispute – sometimes even leading to Court verdicts – as to what happens re your health insurance obligations if you  are BOTH an employee AND self-employed. 

Why do some people have a second job?  Obviously, many reasons…maybe the income from one job isn´t enough to pay the bills. Sometimes, people have more than one professional area of interest.  Some people feel two jobs provide them with extra financial security.

So, the question arises sometimes: if you are both self-employed and an employee, should you be publicly health insured or privately insured? Self-employed/freelancers always have the right to choose private insurance OR public insurance, whereas employees earning under a certain income limit must choose public insurance as “ pflichtversicherte.”

The German rule book “Das Fünfte Buch des Sozialgesetzbuches“ specifies who is publicly insured. But if someone is both an employee and self-employed, it sometimes takes judges at the Federal Social Court/ “ Bundessozialgericht “ to make a decision whether that person belongs in the public or the private system.

As a rule of thumb,  self-employed people working most of the time as just that but also spending some time in the week as employees CAN be privately insured. In such, cases, the employer transfers payments for public pension and unemployment insurance but NOT for health insurance.

What is decisive?

It depends... if a self-employed person spends overwhelmingly more time on this self-employment than on the employee job and generally earns more money from the self-employment, then private health insurance is usually acceptable legally!

IF, however, the employee relationship is more time-consuming and generates more income than through the self-employment activity, then public insurance is the only legal possibility (as long as the employee income is under 60,570 euros a year (as per January 2019 ).

Second rule of thumb (because there is NO exact rule!!):

If the self-employed/freelancer works under 18 hours a week in that area and has a German employee contract... then USUALLY the latter “ wins “ and public insurance it is!!  Fortunately, only the employee contributions towards social insurances  must be paid and NOT extra ones based on self-employment earnings!

On the other hand, if the activity is considered overwhelmingly self-employed/freelance and the employee contract much less significant, then this person – if wishing to have public insurance as a so-called voluntary member / “ freiwilliges Mitglied “ must pay contributions based on BOTH activities.

Yet another rule:

If someone is self-employed AND works only up to 10 hours a week BUT employs someone and pays them a salary, then the Bundessozialgericht has agreed the self-employment aspect carries more weight than if no employees are hired! So, it is possible that the income from the employee work as well as the time needed to do this work would make public insurance obligatory… but, at the same time , this person having themselves an employee may carry extra weight on a final decision about health insurance obligations.

There is sometimes room to manoeuvre…if the income from the self-employed work is LESS THAN the income from the employee job BUT it can be proved that more time is spent on the self-employed activity, then it is NOT obligatory to have public insurance.