Starting a family means considering the financial implications it could have on your life – being a parent can mean losing your job or taking a financial loss during pregnancy and during maternity leave. Parental allowance (Elterngeld) has made it so that nowadays both parents (whether mother or father) have the opportunity to stay home with their children, ensuring that families without the “traditional” style of stay at home mothers and working fathers are also protected financially.
Expectant mothers who are about to give birth are covered by maternity protection (Mutterschutz) and enter maternity leave - this means they are no longer allowed to work; however, this doesn’t mean they can no longer earn any income. During this time, expectant mothers receive maternity benefits (Mutterschaftsgeld). In this article, you can find out what that means and how it affects your finances.
What exactly are maternity benefits?
In Germany, expectant mothers have so-called maternity protection, a required maternity leave that applies before the birth of their child as well as for a certain amount of time after the birth. Maternity protection prevents health hazards at the workplace and helps avoid financial disadvantages or dismissal from employment.
Maternity benefits are paid out as early as six weeks before childbirth and eight weeks following. Entitlement to these benefits is defined by one’s form of health insurance as well as employment status at the beginning of the protection/leave.
Maternity benefits prerequisites
In order to qualify for maternity benefits, one must have an existing employment relationship at the beginning of the protection period/maternity leave (Mutterschutz). Maternity benefits are fire and foremeost paid by your health insurance, not your employer, which leads to some further prerequisites.
Mothers with statutory and voluntary insurance are automatically entitled to maternity benefits, while those with private insurance cannot receive any money from the health insurance fund – in this case, the Federal Insurance Office (Bundesversicherungsamt) will pay up to 210 euros on a one-time basis. Expectant mothers who are unemployed but have family insurance are not entitled to maternity pay, however, this changes if they are marginally employed. In this case, the Federal Insurance Office pays for the benefits.
Maternity pay amounts
Health insurance funds pay a maximum of 13 euros per calendar day for maternity benefits; however, maternity benefits are also based on your income during the three months prior to the start of the protection period or maternity leave. If your income exceeded 390 euros in this time, you are entitled to additional benefits provided by your employer. Employers in Germany are required to make up the difference between your salary & maternity allowance.
Keep in mind – Christmas bonuses and vacation pay are not included in the calculation.
How maternity pay is taxed
Maternity benefits, both from your health insurance and employer, are generally tax-free. It should be noted, however, that the so-called Progressionsvorbehalt still applies – this means the income from the benefits are added to your total annual income amount which determines your tax rate (Steuersatz).This tax rate is then applied to your taxable income (excluding the benefits). You can learn more about Progressionsvorbehalt in this article.