Aging provision

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With the aging provisions , health insurances make provision for the fact that older people make use of more health services. The health insurer is obliged to operate aging provisions using life insurance techniques, as these are materially and legally related to pension insurance investments. In Germany, only private health insurers set up provisions for aging. In the statutory health insurance , the pay-as-you-go method applies , according to which the running costs are paid by the respective generation of contributions.

Procedure of the entitlement cover procedure

The use of health services increases with age. For this reason, provisions must be set up for younger insured persons to cover the additional costs in old age. In old age, these provisions are reversed in order to finance the additional costs. The amount must be determined with the means of actuarial mathematics and is checked by the trustees of the insurance companies . These aging provisions are included in the tariff calculation for the younger insured. The name of this procedure is entitlement coverage procedure.

The calculation is analogous to the actuarial reserve for life insurance. The legal basis for this in Germany is the Calculation Ordinance (KalV) in conjunction with Section 12 of the Insurance Supervision Act (VAG). The correctness of the calculation is checked by an actuary .

In the entitlement coverage procedure of full insurance, capital is systematically built up for old age. For this purpose, the premium is calculated in such a way that it is above the premium that is actually required at a young age and below the premium when it is old. The difference between the premium actually levied and the calculated costs for health services is added to the aging provision. If the arithmetical costs are higher than the premium charged when the policyholder is older , the difference can be financed in a pension-like manner by withdrawing from the aging provisions. No benefits are paid out, but rather used to reduce contributions.

Missing provision for aging in statutory health insurance and demographics

Aging is not just an individual issue. As a result of medical progress and demographic development , the proportion of the elderly population has been increasing in all industrialized countries for years, and this causes higher medical costs on average. This trend will continue over the next few decades and will have an impact on health insurance contributions.

The consequences for health insurance depend on the financing process, whereby a distinction must be made between the pay-as-you-go system of statutory health insurance and the entitlement cover system as part of the funded system for private health insurance (PKV).

Since no provisions are set up in the pay-as-you-go system, a deterioration in the old-age quotient - in view of the current contribution structures (percentage, therefore lower contribution, e.g. at retirement age) - automatically leads to an increase in the contribution level. The fundraising process, however, is described by some as being independent of the overall demographic development of society. However, it depends on the correct calculation of the necessary provisions within the respective contract group. In addition, this thesis of a demographic advantage of funding is not undisputed (see Mackenroth thesis ).

Economic effects of aging provisions

Since capital is an important factor of production alongside labor, the formation of a capital stock also influences the development of the economy and national income. The formation of provisions for aging leads to an accumulation of capital and this enables more investments, increases labor productivity and improves the competitiveness of the economy. This relationship arises from economic growth theory and has been proven many times internationally (Bruce / Turnovsky (2013), Holzmann (1997), Diamond (1994), Feldstein (1974)). Corresponding studies are available for Germany on the Riester pension (Börsch-Supan / Gasche (2010)) and on private health and long-term care insurance (Schönfelder / Wild (2013)).

Appropriateness of the amount of the aging provision

It is only possible to determine the appropriate level of provisions for old age on the basis of assumptions about future cost increases in the healthcare system, life expectancy, interest rates and other factors. Since insurance histories have to be calculated over the lifetime of the insured, i.e. over periods of mostly more than 50 years, this entails considerable risks of miscalculation.

In addition, there is a conflict of interest between the insured and the insurance company. The insured have an interest in a generous calculation that prevents premiums from rising disproportionately in old age, even in the event of unfavorable development. The companies, on the other hand, aim for low contributions for young insured persons for advertising reasons. Low aging provisions (and thus a high risk of subsequent cost increases) lower the contributions of young insured persons.

Therefore, with the “Law to Reform Statutory Health Insurance (GKV Reformgesetz 2000)”, the legislature has enacted two regulations for full insurance that are intended to prevent “ moral hazard ”. On the one hand, insurance companies have to add a ten percent surcharge to the tariff premium and add it to the aging reserve. In addition, private insurers must offer a basic tariff , the costs and benefits of which are based on statutory insurance and to which any privately insured person can switch at any time.

The insurance industry also offers voluntary savings models with the same goal of cost containment; the latter are managed as individual accounts, not collectively, and are also not transferable.

Aging provisions when changing insurance

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When changing insurance, there is no entitlement under German law to transfer the aging provisions to the new insurance company. This means that the former company receives a “ windfall profit ” in the amount of the provision for aging and the customer declines with the new insurer in the tariff level for his age.

After a few years, the amounts that make up the aging provision are so high that a change of insurer is economically nonsensical for the customer. He is thus effectively tied to the insurance company for life ( lock-in effect ). There is no longer any competition for this customer group.

This is why the claim is repeatedly made to give the policyholder “his” provisions when terminating his contract. This request is rejected by the insurance company on the grounds that aging provisions are made collectively per profit group (groups of similar insurance tariffs and age groups) and not personally on individual accounts. If the aging provision were calculated personally, the normally healthy insured person could change insurer at an older age (see individual retirement provisions ). Despite his older age, he would not have to be required to pay the tariff premium, but a correspondingly reduced premium by offsetting the aging provisions he brought with him.

Aging provisions for internal tariff changes

Unlike when changing insurance, the portability of the aging provisions is fully possible when changing tariffs with the same insurer. A corresponding regulation is anchored in the Insurance Contract Act (§204 VVG). The prerequisite is that the new tariff is a full health insurance tariff with the same or higher-quality services. Further rights can also be transferred to the new tariff. To switch to the basic tariff of the same insurance, it is also possible to take the aging provisions with you, but this depends on the age of the insured person and the start of the contract for the existing full insurance tariff. This is why more and more insured persons are making use of the tariff change in view of premium increases and are increasingly being viewed by consumer advocates as a suitable means of reducing premiums. In practice, however, some insurance companies undermine the efforts of their policyholders to change tariffs. The main reasons are economic disadvantages for the company, which also arise from the transfer of the aging provisions.

Special case: supplementary health insurance

In contrast to private full health insurance, with mere supplementary health insurance it is possible to agree tariffs according to the type of damage insurance. Insurance policies of this kind do not require the establishment of aging provisions. In contrast to the variant based on the type of life insurance, however, the premium here increases with increasing age according to the rate tables.

literature

Web links

Individual evidence

  1. ^ Tristan Nguyen : Accounting of Insurance Companies. VVW, Karlsruhe 2008, ISBN 978-3-89952-407-9 , p. 344.
  2. ↑ § 204 Insurance Contract Act .
  3. ↑ Background to the tariff change within private insurance .
  4. ↑ Stiftung Warentest: Additional dental insurance - 110 tariffs in the test. test.de, May 4, 2010 (accessed online on February 15, 2013)