Understanding the Three Phases of Illness Coverage in Germany
When employees in Germany fall ill for an extended period, they are covered by a three-phase system designed to prevent financial hardship. This system consists of continued pay from the employer (Lohnfortzahlung), statutory sick pay from the health insurer (Krankengeld), and subsequent social benefits. Understanding how these phases work is essential for anyone working in Germany, whether you are a German national or an expatriate.
The system is based on several laws, primarily the Continued Remuneration Act (Entgeltfortzahlungsgesetz, EntgFG) for the first phase and the Social Code Book V (SGB V, sections 44-51) for sick pay. The rules apply equally to full-time and part-time employees who are members of the statutory health insurance system with sick pay entitlement.
Phase 1: Continued Pay (Lohnfortzahlung) — 6 Weeks at Full Salary
During the first six weeks (42 calendar days) of illness, the employer continues to pay the full salary. This is not a government benefit but a legal obligation of the employer, codified in the EntgFG. The prerequisite is that the employment relationship has existed for at least four uninterrupted weeks before the illness begins.
The continued pay equals 100 percent of the regular gross salary, including regular allowances and supplements, but excluding irregular overtime pay. For the employee, this phase is financially painless — the payslip looks virtually identical to a normal working month, with the same tax and social insurance deductions.
The six-week rule applies per illness. If an employee develops a completely different condition, a new six-week period begins. However, if the same illness recurs within twelve months, the previously used weeks count toward the six-week total. This distinction is important and sometimes leads to disputes between employers and employees.
Phase 2: Sick Pay (Krankengeld) — Up to 78 Weeks
Once the six weeks of continued pay expire, the statutory health insurer (Krankenkasse) takes over with Krankengeld. The sick pay amount is calculated as 70 percent of the gross salary, capped at 90 percent of the net salary. Additionally, it cannot exceed the daily contribution assessment ceiling of the health insurance, which in 2026 is approximately EUR 181.23 per day.
From the gross sick pay, two deductions are made. The employee pays their share of health insurance contributions (half of the general rate plus half of the supplementary rate) and care insurance contributions (half of the general rate, with a surcharge for childless individuals over 23). Pension and unemployment insurance contributions are covered by the health insurer, not the employee.
In practical terms, the net sick pay typically amounts to about 55 to 65 percent of the previous net salary. For someone earning EUR 3,500 gross and EUR 2,300 net, the monthly sick pay after deductions is approximately EUR 1,850 — a reduction of about EUR 450 per month.
The Block Period (Blockfrist): 78 Weeks Within 3 Years
Sick pay for the same illness is limited to 78 weeks (546 days) within a three-year block period. The block period starts on the first day of sick pay for a specific diagnosis. Within these three years, all sick pay days for the same condition are cumulated, even if there were periods of work in between.
After the 78 weeks are exhausted or the block period expires, the sick pay entitlement ends. A new entitlement can only arise if the insured person was gainfully employed or available to the labor market for at least six months after the block period ended, and has been a member of a health insurer with sick pay entitlement for at least three months.
Phase 3: After Sick Pay Ends (Aussteuerung)
The exhaustion of sick pay (Aussteuerung) is a critical transition. The health insurer is required to notify the insured person at least three months before the end of sick pay and inform the employment agency. Several options are available for continued financial support.
The seamless transition rule (Nahtlosigkeitsregelung, Section 145 SGB III) allows individuals who are still unable to work to claim unemployment benefits (ALG I), even though they normally would need to be available for work. The ALG I amount is typically 60 percent (67 percent with children) of the last net salary.
A disability pension (Erwerbsminderungsrente) may be appropriate if the inability to work is expected to be permanent. The application should be filed well in advance, as processing can take several months. The pension amount depends on the accumulated pension entitlements.
Gradual reintegration (Hamburger Model) offers a structured return to work, starting with reduced hours that are progressively increased over weeks or months. During this period, the employee continues to receive sick pay rather than wages.
Financial Planning Tips
The income loss during sick pay can be substantial over an extended period. At EUR 450 per month, the cumulative loss over 18 months of sick pay amounts to approximately EUR 8,100. Several measures can help mitigate this impact.
Private daily sickness allowance insurance (Krankentagegeldversicherung) can bridge the gap between sick pay and net salary. These policies typically pay a fixed daily rate starting from day 43 of illness. The premiums are relatively affordable and the insurance is particularly valuable for higher earners, where the income gap is larger.
Building an emergency fund of three to six months' expenses provides a financial buffer. Reviewing and potentially reducing fixed costs (subscriptions, insurance premiums, unused memberships) can free up additional resources during the sick pay period.
Key Takeaways
The German system provides substantial protection during extended illness, but the financial impact is still significant. Understanding the three phases, knowing your rights, and planning ahead can make a difficult situation more manageable. Use our sick pay calculator to model your specific situation and develop a financial plan that accounts for the different phases of illness coverage.