What special features apply to sickness benefit?

In the event of prolonged incapacity for work, employees are entitled to sickness benefit from the health insurance after the employer's 6-week salary continuation period has expired.

This benefit is treated differently for tax purposes:

• Sickness benefit from statutory health insurance is tax-free but is included in the calculation of the tax rate (progression clause). This means that the tax rate applied to other income is higher, leading to an increased tax burden.
• Sickness benefit from private health insurance is tax-free and is not included in the progression clause.

This different treatment is acceptable according to the Federal Fiscal Court.

Sickness benefit from statutory health insurance is included in the progression clause not only for those with compulsory insurance but also for those with voluntary insurance.

However, sickness benefit from private health insurance is rightly disregarded. While statutory health insurance is largely based on the principle of solidarity, private health insurance follows the equivalence principle. The sickness benefit is therefore based on corresponding contributions (BFH ruling of 26.11.2008, BStBl. 2009 II p. 376).