What is the difference between Arbeitslosengeld I and Arbeitslosengeld II (Hartz IV)?

Arbeitslosengeld I and Arbeitslosengeld II (commonly called “Hartz IV”) are benefits paid to unemployed people in Germany. These benefits seem to be identical but in reality they are completely different. Generally people who are entitled to Arbeitslosengeld I are not entitled to Arbeitslosengeld II which is a social benefit. Exceptions are situations when the amount of ALG I is not sufficient. In such cases you may receive additional money under ALG II. Similarly, people who are entitled to ALG II are usually not entitled to a payment under ALG I. ALG I is usually dealt with by the Agentur für Arbeit, and ALG II by the Jobcenter.

What is an Arbeitslosengeld I payment?

ALG I is not a social benefit but a benefit of the German unemployment insurance system. Anyone who has paid unemployment insurance (die Arbeitslosenversicherung) for a period of at least twelve months within the framework of their employment, is entitled to receive the Arbeitslosengeld I benefit if they become unemployed. It is paid regardless of your assets. In practice it means that the benefit cannot be reduced due to savings.

However, it should be taken into consideration that income from additional employment will be taken into account when calculating the amount of ALG I. In addition, the additional work must not take up more than 15 hours per week. Otherwise, you will not be unemployed and as a result, you will not be entitled to unemployment benefit.

Amount of Arbeitslosengeld I

The money paid under the Arbeitslosengeld I benefit is not a fixed amount, but its amount is calculated on the basis of the applicant’s previous income. People without children are entitled to 60% of their net income so far. Those who have children are entitled to 67% of their net income so far.

In addition, contributions are paid for health insurance (die Krankenversicherung), pension insurance (die Rentenversicherung) and long-term care insurance (die Pflegeversicherung). Contributions to the private health insurance (private Krankenversicherung) are also paid under certain conditions. This applies to applicants who have been privately insured for at least 5 years without interruption. However, private health insurance contributions are only paid in the amount of the statutory health insurance contributions.

As far as the pension insurance premiums are concerned, please note that due to the lower income, the premiums are also lower, which is later reflected in the pension amount.

How long is the right to Arbeitslosengeld I valid for?

The right to the Arbeitslosengeld I benefit is only granted if the applicant has paid unemployment insurance contributions for at least 12 months within the last two years. The validity of the benefit depends on the length of time the contributions have been paid.

Important: If the contract of employment is terminated by you or if it is terminated through your fault, you are subject to a period of prohibition (Sperrzeit) for the first three months and do not receive ALG I benefit during this period. This will only be paid after three months.

There are special regulations for unemployed people over 50 that allow for an extension of the benefit.

What is Arbeitslosengeld II?

Arbeitslosengeld II (abbreviated ALG II), commonly known as “Hartz IV”, is a benefit paid from the German state budget to unemployed people who for various reasons have not paid their unemployment insurance contributions or have paid them too briefly. The purpose of the benefit is to provide for those in need. Therefore, even those who are working and whose wages are not sufficient to cover their living expenses can apply for Arbeitslosengeld II.

ALG II was introduced in 2005 by merging two other social security benefits, “Sozialhilfe” and “Arbeitslosenhilfe”. Since this benefit is paid from the state’s coffers, before it is granted it is checked whether there is a legal basis for granting it. The income and assets of all persons living together with the applicant and to whom he or she is directly related, such as spouses, children, family members or life partners, are taken into account. While family allowance (das Kindergeld), for example, is also treated as income, there are a few financial reserves that remain inviolable and therefore cannot be taken into account when determining the eligibility for the allowance. These include certain forms of private pension insurance, such as the so-called “Riester-Rente”, which is an additional private pension insurance supported by the German state.

Amount of Arbeitslosengeld II

ALG II is paid according to the “fixed basic social security rates” (fester Regelsatz). (fester Regelsatz). The amount of ALG II varies depending on the age of the children.

There is also the possibility to apply for “additional needs” (Mehrbedarf). In addition, it is possible to apply for an “additional need” (Mehrbedarf). This applies in particular to single parents, disabled persons and pregnant women.

The costs for rent and heating are also covered, as long as they are reasonable. For example, if a person lives alone and rents a three-room apartment, the rent will not be paid in full because the apartment is usually too large for a single person.

How long can I receive Arbeitslosengeld II?

The entitlement to ALG II is valid as long as you are registered as unemployed and are in a situation in which you need external financial assistance. It is important to note, however, that recipients of unemployment benefit in Germany are obliged to actively seek work and to attend every written request to the employment office. If you do not do this you may lose your benefit.

Will I receive a benefit if I resign from my job?

If an employee resigns from his/her job or is dismissed due to his/her own fault, he/she has to take into consideration certain consequences.

  • The effect of an employee’s resignation on the Arbeitslosengeld I benefit: If an employee resigns from his job he will be subject to a “period of prohibition” (Sperrfrist) in the case of ALG I. (This is called a “sperrfrist” and amounts to 12 weeks. This means that you will not receive benefits for this period of time. After the 12 weeks have passed, the benefit will be paid as normal. However, there are exceptions to this rule. If there is a valid reason for resigning from work (e.g., bullying or a medical condition), the blockade does not apply.
  • Effect of an employee’s termination of employment on the Arbeitslosengeld II: If an employee resigns on his own, he is subject to a sanction in the case of ALG II, which is a reduction of the benefit by 30 percent. The benefit reduction takes place during the first 3 months of unemployment.

Where and how can I report my unemployment in Germany?

Unemployment in Germany is reported to the employment office (Bundesagentur für Arbeit). People whose fixed-term employment contract has not been renewed or who have had their employment contract terminated must report to the employment office on the first day of unemployment at the latest.

If you were not aware that your fixed-term employment contract would not be renewed, you must report to the authorities no later than three days after your last day of work.

In addition, it is important that you register as a “jobseeker” with the job centre at the latest three months before your employment ends (e.g. in the case of a fixed-term contract if you do not know whether it will be extended). You can do this by telephone on 0800 4 5555 00 or online: register as a “jobseeker”. (you must first register on the website). However, you will not need to visit the Job Centre at a later date to complete the remaining formalities.

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