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KSK, pension and co. - How creative professionals can best insure themselves
Social insurance for players in the cultural industries
Stefan Kuntz has been advising creative professionals and artists on business issues for over 40 years. We spoke to him about one of his special topics: social insurance for creative professionals.
Mr. Kuntz, can you describe in a few words what social insurance actually is?
It's actually quite simple. Social insurance is insurance against financial problems that can arise due to illness or a lack of income, especially in old age. In Germany, everyone must have health insurance, and some professions also have pension insurance.
Social insurance is an expensive thing ...
That's true. Health insurance - including long-term care insurance, which is always included - costs 17.65 percent* of income with the statutory health insurance funds. No matter how low your income is, you have to pay at least 133 euros*. For higher incomes, the contribution is capped at 768 euros per month.
No wonder that many people prefer to take out private insurance to pay lower contributions or receive more benefits for their money!
Private health insurance costs less for high-earning, healthy, young people, but can be very expensive in old age. It is important to weigh up the advantages and disadvantages of private versus statutory health insurance very carefully, especially with regard to your own future life plans (family!).
You also mentioned pension insurance as part of social insurance ...
Pension insurance costs another 18.7 percent* of your income. It starts at 33 euros/month* and ends at 1,187 euros*.
However, there is an alternative for artists.
Most people will already have heard of it: As an alternative to the usual statutory pension insurance, artists can also be insured through the Künstlersozialkasse. Self-employed artists and publicists are thus insured comparatively inexpensively and almost as comprehensively as employees. Due to the special regulations of the KSK, they only have to pay half of the above percentages. This means that they are insured much more cheaply than other self-employed people.
And how do you become a member of the Künstlersozialkasse?
By submitting an application. Unfortunately, the application is difficult and you should get help with it. The contributions to the KSK are calculated as a percentage, as is the case for all legally insured persons. The underlying income is estimated in advance.
What is the "KSK" actually?
In 1983, the German Bundestag passed the Artists' Social Insurance Act under pressure from artists and artists' associations such as the Association of German Writers. Its main purpose is to solve the problem of old-age poverty among artists. Artists' social insurance is a special regulation for a very specific group of people, namely artists and publicists. There are similar special regulations for farmers, midwives, sea pilots and miners.
That sounds good. So why is the KSK always so controversial?
As with all special regulations, there is always the problem of "why not us, but why the others"? Ultimately, the answer is that the Bundestag limited this special regulation to artists and publicists because it considered it to be socially and politically correct. As a result, it naturally had to lay down rules on how artists and publicists are defined. And these rules, the Artists' Social Security Act, are the source of the problems.
Basically, it is a bureaucratic decision as to who is "already" working as an artist and who is "only" working creatively?
The visual artist who places sculptures in fields as part of a land art project must be distinguished from the farmer who places scarecrows in his fields; and the designer who creates a website from a programmer who builds Internet stores using special software. The consequence of this is that the visual artist and the designer can be insured through the KSK, but the farmer and the programmer cannot.
But that sounds very simple and clear.
Many KSK administrators will understand that website design is hardly possible without programming - and vice versa. But that doesn't mean they can change the requirements of the KSVG. The rules are lagging behind the development of technologies and the cultural and creative industries. These discrepancies must be changed through lobbying or simply endured!
What rules do artists have to adhere to under the current legislation in order to be insured through the KSK?
Artists and publicists who want to be and remain insured through the KSK must earn more than 3,900 euros per year from their self-employed work. There are entry regulations for those starting out in the profession.
Why is it sometimes so difficult to become insured through the KSK?
There are often problems with proof. For example, it often turns out that the self-employed work is only bogus self-employment and should actually be carried out as an employee. This causes a lot of trouble, especially for the employer. Or the evidence is simply unconvincing.
So do you have to be an exclusively self-employed artist?
Artists and publicists are allowed to work as employees at the same time, that's not a problem. But they are only allowed to carry out a second, self-employed activity to a very limited extent if it is of a non-artistic or non-publishing nature.
The limit is 5,400 euros profit per year in this non-artistic or non-publishing activity. If the profit is higher than this, the man / woman can no longer be insured through the KSK, but is forced to take out "voluntary" insurance with their statutory health insurance fund, which is then twice as expensive because the full contribution has to be paid. If you earn more than 38,100 euros a year, you can no longer be insured through the KSK, so you are completely out.
Can you give us an example to explain this?
A textile designer from Rosenheim designs prints for T-shirts. She buys the T-shirts, prints them with her own design in small batches and sells the finished T-shirts. This earns her a profit of 3,500 euros. She also sells designs to sports clubs for use. This enables her to make a profit of 4,000 euros - insurance via the KSK is possible. After a while, she also wants to sell T-shirts from other manufacturers. When she realizes that she will then become a retailer and be commercially active, putting her KSK insurance cover at risk as soon as the profit from the commercial area exceeds 5,400 euros, she gives up and outsources this area to her husband's fashion business, where she is then also employed. No problem with the KSK either - but this employment subject to social security contributions is expensive for her husband. Although she only receives 1,300 euros net, he has to pay around 1,000 euros in contributions on top.
And what happens if this designer decides to end her KSK membership after all?
The example goes even further: her husband emigrates to Texas. She buys the store from him and continues to run it on her own. "Unfortunately", the store is doing better than before and her profit is already 42,000 euros in the first year. The consequence: she is kicked out of the KSK - completely! Her profit from her artistic activities remains at 7,000 euros per year, her total profit at 49,000 euros. As a childless woman, she pays 17.9% health and long-term care insurance contributions, which amounts to 731 euros per month. She no longer has pension insurance because she can't afford it.
Is it actually possible to switch back to the KSK?
This can also be illustrated by this example. At some point, the woman realizes that she would rather just work as a designer and now sells the rights to use her designs to a fashion house for a lucrative price. She sells the store to her friend, who pays off the purchase price in many annual installments of 5,000 euros each, secured by a guarantee. She now pays a monthly contribution of 642 euros to the KSK for her annual profit as a designer of 40,000 euros, which she has no problem picking up again. The 5,000 euros from the store sales are less than 5,400 euros and remain contribution-free.
Your advice to creative professionals?
People in the cultural and creative industries who are also active in the fringes of the arts should try to limit their annual profit from non-artistic, self-employed work to less than €5,400 and initially take advantage of the favorable social security contributions of the Künstlersozialkasse ("Artists' Social Security Fund") If these people then realize after a few years that they make much more profit and satisfaction in the non-artistic sector and can afford normal, high contributions like other self-employed people, then they should say "Goodbye!" to the KSK.
* All information as of 2017.