Small-area analyses are required to disentangle the association between socio-economic inequalities and health in Germany. In such analyses, not only individual but also contextual (e.g. area level) characteristics need to be included. Contextual variables can be used to group smaller areas such as counties into clusters with similar properties. Thus, individual survey data can be linked with contextual characteristics while maintaining data protection and at the same time achieving sufficiently large case numbers. Concurrently, theoretical models explaining health inequalities need to be further developed so that they embrace contextual characteristics.