‘Unemployment Benefit II’ (Arbeitslosengeld II) is the newly created benefit in Germany for workless and needy people of working age who either lack or have exhausted entitlements in the contribution-based unemployment insurance system. This paper explores the effects of an ‘activating’ benefit regime on respondents with inferior health-related capacities by re-analysing data from a recent customer panel survey of this population of recipients. For one, the overall level of activation produced by the new system is differentiated with regard to the health status of the target population. Second, the effects of activation on two employment-related outcomes are estimated, taking health into account.