ELStAM Procedure 2026: This is how the new private health insurance notification for employers works

Every year in January the same ritual: Employees with private health insurance submit their contribution statements. Payroll processes the data. Mistakes happen. Questions arise. From January 1, 2026, this will come to an end.

The Federal Ministry of Finance established the basis for a fully digital reporting process with the Annual Tax Act 2020. After being postponed twice, it will now officially start at the turn of the year 2025/2026. For payroll offices, tax advisors, and HR departments, this means: less paper, but new processes.

This article explains how the process works, what deadlines apply, and what you as an employer need to prepare concretely.

The most important points at a glance

• From January 1, 2026, private health insurance companies will transmit contribution data electronically to the Federal Central Tax Office (BZSt)

• Paper statements will no longer be needed for the employer’s subsidy and the allowance for retirement provisions

• Employers will retrieve the data through the existing ELStAM procedure

• Transition period until the end of 2027: In case of technical problems, substitute statements are still allowed

• Right of objection: Employees can refuse the data transmission but will then lose tax advantages

What changes from 2026

The current procedure

Currently, the consideration of private health insurance contributions in payroll was as follows:

1. The employee receives an annual contribution statement from their private health insurance

2. They submit this to the employer

3. The payroll department manually records the data

4. The employer calculates the tax-free subsidy and the allowance for retirement provisions

The problem: Statements get lost, are submitted late, or contain mistakes. Manual entry takes time and is prone to errors.

The new digital procedure

From 2026, data exchange will happen automatically:

1. PKV reports to the BZSt: By November 20 of each year, the insurers will electronically transmit the contribution data for the following year

2. BZSt compiles ELStAM: The Federal Central Tax Office creates electronic income tax deduction features from the data

3. Employers retrieve: The data appears in the monthly ELStAM list, which your payroll software retrieves anyway

4. Automatic consideration: The software adopts the values for subsidy and allowance for retirement provisions

The employee does not have to do anything anymore. No statement to submit, no deadlines to observe.

What data will be transmitted?

The BZSt will provide two new income tax deduction features:

1. Contribution for the tax-free employer subsidy

This value indicates how much the employer can pay as a tax-free subsidy for private health insurance. The legal basis is § 3 No. 62 EStG.

Important: The transmitted value does not entitle to payment. Whether and to what extent a subsidy is to be paid depends on the social law provisions in § 257 SGB V and § 61 SGB XI. This check remains the employer’s task.

2. Contribution for the allowance for retirement provisions

This value is included in the calculation of the allowance for retirement provisions, which is considered in income tax calculations. The legal basis is § 10 para. 1 No. 3 EStG.

Only contributions to basic protection are transmitted. Additional insurances (dental, travel, chief physician treatment) are not included.

Timeline: When does what happen?

In the case of mid-year changes (contribution increase, change of tariff, birth of a child), the private health insurance will report the new data immediately. They will then appear in the next monthly ELStAM list.

What employers need to prepare now

1. Check payroll software

Your payroll software must be able to process the new ELStAM fields. Most providers have already announced or rolled out respective updates. Clarify with your software provider:

• Is the update already installed?

• How will the new PKV fields be displayed in the payroll?

• Is there a need for action in the configuration?

2. Clean up existing data

In December 2025, you should check:

• Are all tax IDs of your privately insured employees correctly recorded?

• Are the birth dates correct?

• Are the ELStAM retrievals active for all employees?

Erroneous master data leads to the BZSt being unable to allocate the PKV data.

3. Inform employees

Inform your privately insured employees about the new procedure. Important points:

• From 2026, they will no longer have to submit a statement

• They have a right of objection (with consequences, see below)

• For questions about contribution amounts, the PKV is the right contact person, not the employer

4. Adjust processes

Remove the item "collect PKV statements" from your year-start checklist. Instead:

• Check in January whether data for all PKV-insured are appearing in the ELStAM list

• Document cases where no data is available (objection or technical problem)

• Determine how to handle substitute statements during the transition period

Right of objection: What happens if employees refuse?

Employees can object to the data transmission by their PKV. That is their right. However, they should be aware of the consequences:

Consequences of an objection

What employers must do in case of an objection

If an employee has objected, you will not receive PKV data via ELStAM. In this case:

• No tax-free subsidy: You may not treat the employer subsidy as tax-free even if the employee presents a paper statement

• No allowance for retirement provisions: PKV contributions will not be included in the income tax calculation

• Documentation: Record that no data are available and why

The employee can later claim the contributions as special expenses through their tax return. However, this will lead to a liquidity disadvantage during the year.

Tax-free subsidy and social law claim: An important difference

A common misunderstanding: The value transmitted via ELStAM for the tax-free subsidy is not identical to the subsidy that the employer must pay.

The tax law framework (ELStAM)

The BZSt transmits the amount up to which an employer subsidy remains tax-free. This value is based on contributions to basic protection in private health insurance and additional insurance.

The social law claim (SGB)

Whether and how much subsidy an employee receives is governed by § 257 SGB V (health insurance) and § 61 SGB XI (long-term care insurance). The entitlement depends on:

• Mandatory insurance or insurance exemption of the employee

• Amount of the actual PKV contribution

• Amount of the maximum employer subsidy (2026: 421.76 euros for health insurance + long-term care insurance)

Practical example

An employee pays 600 euros monthly for their private health insurance (basic protection). The maximum employer subsidy in 2026 is 421.76 euros.

• ELStAM reports: 600 euros (tax-free framework)

• Social law claim: 421.76 euros (maximum)

• Employer pays: 421.76 euros tax-free

The difference (178.24 euros) is borne by the employee themselves. The ELStAM value is higher here than the actual subsidy.

In the reverse case (PKV contribution lower than maximum), the employer pays only up to the actual contribution amount.

Transitional regulations 2026 and 2027

The BMF has granted a two-year transition period. During this time, the following applies:

When the substitute procedure applies

If PKV contributions cannot be or are incorrectly generated as ELStAM for technical reasons, the employer may exceptionally rely on a paper statement from the PKV.

Technical reasons may include: - Errors in data transmission by the PKV - Allocation problems at the BZSt - Software issues during the ELStAM retrieval

When the substitute procedure does not apply

The substitute procedure applies not if: - The employee has objected to the data transmission - The employee is insured with a foreign insurer - The PKV does not provide basic protection

In these cases, even during the transition period, no tax-free treatment via paper statements is possible.

Special cases and exceptions

Foreign insurers

Only domestic PKV companies are obliged to report electronically. Employees who are insured with foreign insurers do not fall under the new procedure.

For these employees the following applies: - No ELStAM data available - No tax-free employer subsidy possible - Consideration only via the income tax return

Employees entitled to allowances

Civil servants and other employees entitled to allowances are often only partially privately insured. The PKV only reports the actually insured portion. The employer (service provider) must separately consider the allowance portions.

Family insurance in the PKV

If family members are co-insured in the PKV, the PKV reports the total contributions. The allocation to the individual insured persons is the responsibility of the policyholder. In case of questions about allocation, the PKV is the right contact person.

Checklist for employers

By November 2025

• Check payroll software for ELStAM-PKV capability

• Check master data of all PKV-insured (tax ID, birth date)

• Inform employees about the new procedure

• Adjust internal processes (year-start checklist)

In December 2025

• Retrieve and check ELStAM lists with PKV data

• Identify missing data and clarify causes

• Determine approach for the transition period

From January 2026

• Monthly check of ELStAM-PKV data

• Documentation of missing data (objection vs. technical problem)

• Accept substitute statements only in case of technical problems

Conclusion

The new PKV reporting process through ELStAM brings a real simplification. The annual hunt for statements is eliminated, transfer errors are less frequent, and the process becomes more predictable.

However, preparation is needed for the transition. Check your software, clean up your master data, and inform your employees. The transition period until the end of 2027 gives you room to maneuver, but those who start early will benefit sooner.

If you have questions about implementation in your payroll software or about the new processes: project b. supports payroll offices and tax advisors in digitalizing their payroll processes.

Sources and further information

1. Federal Central Tax Office: KV/PV – Information for Employers

2. BMF letter of June 3, 2025: Data exchange between PKV companies, tax administration, and employers in the context of income tax deduction procedures

3. PKV Association: Digital Data Transmission

4. Haufe Personnel: Changes for those privately insured from 2026

5. Legal Basis:

   • Annual Tax Act 2020 (introduction of the procedure)

   • Credit Market Promotion Act (postponement to 2026)

   • § 39 EStG (Income tax deduction features)

   • § 3 No. 62 EStG (tax-free employer subsidy)

   • § 10 para. 1 No. 3 EStG (allowance for retirement provisions)

   • § 257 SGB V (subsidy for health insurance)

   • § 61 SGB XI (subsidy for long-term care insurance)

Related articles on project b.

• Modernization of the employer procedure from 2026: What payroll offices and tax advisors need to know now

• AI in Payroll Accounting 2026: Practical guide for payroll offices and tax advisors

• 10 processes in payroll accounting that AI takes over today