In principle, health insurance contributions must be reported in the income tax return for the contribution year pursuant to § 10 Abs. 1 Nr. 3 a) EStG. Refunds paid by the health insurer to the taxpayer, on the other hand, must be deducted from the special expenses to be claimed. But how are payments under a health insurer's bonus program to be treated for income tax purposes?
Timing of recognition
Under the cash-basis principle (§ 11 Abs. 1 EStG), bonus payments must be reflected in the income tax return as follows:
- Cash bonuses are recognized at the time of payment
- In-kind bonuses are recognized at the time of issue
- Credits to the bonus account are recognized at the time of the credit entry.
Valuation of bonus payments
For the valuation of bonus payments in the income tax return, it is relevant whether the underlying service falls within the regular scope of basic health insurance coverage or not. If the bonus payment relates to services within the scope of basic health insurance (e.g. preventive check-ups, early-detection screenings, etc.), it is treated as a refund of contributions. Accordingly, it must be deducted from the special expenses to be claimed.
If, however, the bonus relates to services not covered by basic health insurance (e.g. alternative medicine, professional dental cleanings, etc.) or serves to promote health-conscious behavior (e.g. memberships in sports clubs or fitness studios), and the insured person has borne the cost financially, this does not constitute a refund of contributions. In this case, no reduction of the special expenses is required.
With regard to the amount of bonus payments, it should also be noted that bonuses for family-insured members are attributed to the principal insured.
Simplification rule until 31 December 2023
For the time being, the tax authorities have determined that for bonus payments up to 31 December 2023, bonuses relating to basic health insurance services likewise remain unconsidered in the income tax return if they are below EUR 150. If a bonus payment from the health insurer exceeds this threshold, the excess amount is initially treated as a refund of contributions and must be deducted from the special expenses to be claimed. However, if the taxpayer can demonstrate that the bonus payment, even with its excess amount, does not relate to basic health insurance services, this payment is likewise not subject to tax.
Frequently asked questions
Frequently asked questions
How are bonus payments from health insurers treated for income tax purposes?
The decisive factor is whether the bonus relates to benefits of the basic health insurance. If so (e.g. preventive care, early detection), it qualifies as a contribution refund and reduces the deductible special expenses under § 10 Abs. 1 Nr. 3a EStG. Bonus payments for benefits outside basic coverage (e.g. alternative medicine, professional dental cleaning) or for health-conscious behaviour (e.g. gym membership) are not treated as contribution refunds, provided the insured person has borne the costs personally.
When must health insurance bonus payments be recorded for tax purposes?
Recognition follows the cash-flow principle under § 11 Abs. 1 EStG. Cash bonuses are recognized at the time of payment, in-kind bonuses at the time they are issued, and credits to a bonus account at the time they are credited.
Which simplification rule applies to bonus payments until 31 December 2023?
The tax authorities disregard bonus payments up to a threshold of EUR 150 per year, even if they relate to basic health insurance benefits. If the bonus payment exceeds this amount, the excess must generally be deducted from special expenses (Sonderausgaben) as a contribution refund. However, the taxpayer may provide proof that the excess amount does not relate to basic benefits either and therefore has no tax effect.
How are bonuses attributed for family-insured persons?
Bonuses paid to family-insured participants are attributed to the primary insured person. They are therefore reported in that person's income tax return and may reduce special expenses (Sonderausgaben), provided they relate to basic insurance benefits.
For which services do bonus payments not qualify as a contribution refund?
A contribution refund does not apply if the bonus payment relates to services outside basic health insurance coverage, such as alternative medicine or professional dental cleaning. The same applies to bonuses promoting health-conscious behavior, such as memberships in a sports club or gym, provided the insured person bore the expenses themselves. In these cases, no reduction of special expenses (Sonderausgaben) is required.