Can employer subsidies be fully credited towards the basic contributions?

Contributions to basic health insurance and compulsory nursing care insurance have been fully deductible as special expenses since 2010. However, those who receive tax-free subsidies from their employer as privately insured individuals must have these credited.

According to the tax authorities, the subsidies are always fully allocated to the basic health insurance and only reduce these contributions. This applies even if optional benefits are included (§ 10 para. 2 no. 1 EStG).

Since the employer's contribution also applies to contributions for optional and comfort services, it would be plausible to allocate it according to the composition of the contributions to basic and comfort insurance. This would mean that the self-paid contribution share for basic coverage is higher and consequently the tax saving is greater. The question, therefore, is whether tax-free employer subsidies for private health insurance should be fully or partially credited to basic coverage.

The Federal Fiscal Court has confirmed the practice of the tax offices: The tax office may fully credit the tax-free employer subsidy to the contributions for basic coverage, even if the insurance contract includes optional and comfort services. The subsidy does not have to be proportionally divided between basic and optional services (BFH ruling of 2.9.2014, IX R 43/13).