Key points at a glance
- Federal law requires premium subsidies for insured persons in modest economic circumstances but leaves the definition of income to the cantons (Art. 65 KVG).
- Most cantons start from the tax assessment and add part of the assets and certain deductions.
- In Aargau the rule for 2026 is: taxable income plus 20% of taxable assets, without deductions such as pillar 3a or buying into the pension fund.
- Tax data is often two to three years old; on request the cantons must take the most recent circumstances into account (Art. 65 para. 3 KVG).
What is relevant income?
Relevant income is the figure a canton uses to decide on a premium subsidy. It is meant to reflect your economic capacity: not only what you earn, but also what assets you have and which voluntary deductions you made in your tax return.
The term does not appear in the Federal Health Insurance Act (KVG). The Confederation only requires the cantons to reduce the premiums of insured persons in modest economic circumstances. What “modest” means and how income is measured is regulated by each canton in its own implementing act. That is why there are 26 different definitions. Some cantons speak of “eligible income”, “relevant total income” or “adjusted net income”.
Relevant income is not the same as the income taken into account for supplementary benefits. There, the rules of the Federal Act on Supplementary Benefits apply. People who receive supplementary benefits get the premium subsidy automatically on the basis of that entitlement, for example in Aargau.
How it works
Most cantons calculate in three steps:
- Starting value from the tax assessment. This is taxable income (for example Aargau) or net income (for example Bern) from a particular assessment.
- Additions. Certain deductions are added back so that voluntary savings contributions do not artificially increase the entitlement. Commonly affected are contributions to pillar 3a, purchases into the pension fund and property maintenance above the flat-rate deduction.
- Share of assets. A percentage of assets is added to income, often after an allowance.
The canton compares the result with an income limit or uses it in a formula. In Aargau the rule for 2026 is: premium subsidy = sum of the household’s reference premiums minus 17.5% of relevant income. In the canton of Bern, relevant income determines the income bracket, which gives a fixed amount per person.
Because the tax assessment is often two to three years old, it does not always match your current situation. Federal law therefore requires the cantons to take the most recent income and family circumstances into account on request. The cantons decide from what level of change they recalculate.
Many cantons have special rules for people taxed at source. Bern, for example, uses 75% of gross income. For young adults, some cantons take the parents’ circumstances into account as well.
Legal basis
Art. 65 para. 1 KVG obliges the cantons to grant premium subsidies to insured persons in modest economic circumstances. Under Art. 65 para. 1bis KVG, for lower and middle incomes they reduce children’s premiums by at least 80% and those of young adults in education by at least 50%. Since 2026, under Art. 65 para. 1ter KVG each canton sets the maximum share of disposable income that the premium may account for.
Art. 65 para. 3 KVG requires the cantons, when assessing entitlement and in particular on request, to take the most recent income and family circumstances into account. How exactly relevant income is calculated is set out in cantonal law. The annual overview by the Swiss Conference of Cantonal Health Directors (GDK) gives a summary of all 26 cantons; what is binding, however, is always the cantonal law and the decision of the responsible office.
Example: Aargau 2026, pillar 3a counts
Tim, 40, lives alone in the canton of Aargau. According to his tax assessment he has a taxable income of CHF 26,000 and taxable assets of CHF 20,000. He paid CHF 5,000 into pillar 3a and deducted it in his tax return. The reference premium for adults in Aargau in 2026 is CHF 5,830 (source: GDK overview 2026).
| Step | Tim’s own estimate | Calculation under Aargau rules |
|---|---|---|
| Taxable income | CHF 26,000 | CHF 26,000 |
| Pillar 3a added back | CHF 0 | CHF 5,000 |
| 20% of assets of CHF 20,000 | CHF 4,000 | CHF 4,000 |
| Relevant income | CHF 30,000 | CHF 35,000 |
| 17.5% of this | CHF 5,250 | CHF 6,125 |
| Reference premium CHF 5,830 minus 17.5% | CHF 580 per year | no entitlement |
The rules of your canton are summarised on the page premium subsidy Aargau or the page for your canton.
What this means for you
- Have your tax assessment ready. The figures for relevant income are in it. Check which tax year your canton uses.
- Know the additions. Pillar 3a, pension fund purchases and high property costs reduce your taxes, but often not your relevant income.
- Report changes. If your income has fallen significantly since the assessment, for example due to unemployment or separation, ask for a recalculation. The cantons must take the most recent circumstances into account on request.
- Lower your premium, even with a subsidy. The subsidy is a fixed amount or follows a formula. A cheaper insurer or a different model further reduces the premium you still pay. Compare in the premium calculator and in the profiles under health insurers.
Whether premiums are deductible in your tax return is explained under tax deduction.
Common mistakes
- Using gross income. The cantons calculate with figures from the tax assessment, not from your salary statement.
- Forgetting the share of assets. Even moderate assets can remove the entitlement.
- Assuming all cantons calculate in the same way. Formula, tax year, allowances and deadlines differ widely. Moving to another canton can change your entitlement.
- Missing application deadlines. Many cantons require an application by a cut-off date. In Aargau it was 31.12.2025 for 2026.
Frequently asked questions
Is relevant income the same as my salary?
No. The cantons usually start from taxable income or net income in the tax assessment, i.e. after deductions. They then add back part of your assets and certain deductions.
Which tax year counts for the premium subsidy?
That is set by the canton. In Aargau, for 2026 the final assessment of the tax year that began three years before the year of entitlement counts; in the canton of Bern it is the final assessment of the tax year before last.
My income has fallen. Do I have to wait until the tax assessment catches up?
Not necessarily. On request, the cantons must take the most recent income and family circumstances into account. In Aargau, for example, this is possible if income has been at least 20% lower for at least six months.
Do my assets count?
In almost all cantons, yes, with a share. In Aargau it is 20% of taxable assets, in the canton of Bern 5% of net assets after a deduction of CHF 17,000 per family member.
Related terms
- Premium subsidyA premium subsidy (Prämienverbilligung, IPV) is a contribution from your canton of residence towards your basic health insurance premium if you live on a modest income. The canton pays the money directly to your health insurer, so your bill gets smaller. For children from families on lower and middle incomes, it must reduce the premium by at least 80%.
- Reference premiumThe reference premium is a benchmark amount that a canton sets to calculate premium subsidies, separately for adults, young adults and children. It does not correspond to your actual premium. In Aargau, for example, it is CHF 5,830 a year for adults and CHF 1,380 for children in 2026.
- Supplementary benefitsSupplementary benefits (Ergänzungsleistungen, EL) are means-tested payments from the Confederation and the cantons for people receiving an AHV or IV pension whose income does not cover minimum living costs. For basic health insurance, they include a lump sum paid directly to your health insurer. In addition, the canton reimburses the deductible, retention fee and other illness costs.
- Tax deduction for health insurance premiumsYou can deduct health insurance premiums in your tax return, but only up to a maximum amount that also covers other insurance premiums and interest on savings. For direct federal tax, this is CHF 1,800 for single people and CHF 3,700 for married couples, plus CHF 700 per child. Medical costs you pay yourself are also deductible insofar as they exceed 5% of net income.
- Premium relief initiativeThe premium relief initiative sought to ensure that nobody pays more than 10% of their disposable income for health insurance premiums. On 09.06.2024 the people and the cantons rejected it with 55.47% voting no. Since 01.01.2026, the indirect counter-proposal has applied instead: every canton must spend a minimum share of healthcare costs on premium subsidies.
Sources
- Federal Health Insurance Act (KVG), Art. 65Art. 65 KVGfedlex.admin.ch
- GDK: Overview of the cantonal premium subsidy systems 2026 (German)gdk-cds.ch
- FOPH: Health insurancebag.admin.ch