What is care insurance and who pays it?

All workers in Germany pay compulsory care insurance, or Pflegeversicherung, throughout their working lives and as pensioners. 

At the moment, the contribution rate for employees with children is 3.05 percent of their salaries or pensions, while people without pay 3.4 percent. As a rule, the employer pays half the contributions for long-term care insurance.

Freelancers can also choose to pay voluntary care insurance, though they generally have to bear both the employer and employee portions of this.

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Those who pay care insurance have access to financial support with social care in their old age, or whenever they need it. 

How are contributions changing?

According to the law passed by the government in the Bundestag and approved by state leaders in the Bundesrat on Friday, long-term care insurance will go up in Germany. 

From July, people with children will pay 3.4 percent of their gross income for long-term care, up from 3.05 percent (although it will depend on how many children people have – more on that below). At the same time, the additional fee for childfree people will be increased from 0.35 to 0.6 percentage points to a total of 4 percent of their gross income.

Why are contributions going up?

According to Federal Health Minister Karl Lauterbach of the Social Democrats, the increase is needed because of rising costs. The reform he’s drawn up is intended to provide financial security for long-term care insurance until 2025.

The hike in contributions should bring in additional revenue of about €6.6 billion per year. But if this is not enough, the law also contains a decree authorisation for the federal government to further adjust the contribution rate.

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It is viewed by some as controversial that people without children have to pay more than mothers and fathers. 

However, the Federal Constitutional Court ruled in 2001 that a premium increase for people without children is allowed.  

The reasoning behind this is that people who are not raising children have a lower financial burden than those who do, and those with children may rely on care insurance in older age less than childless people because their children are likely to foot some of the care (or help with bills). 

What else is changing?

The government’s law also implements a ruling by the Federal Constitutional Court that parents with several children should be relieved from paying too much in long-term care insurance.

Parents’ contributions will decrease with the number of children they have. From the second to the fifth child under 25, they will pay 0.25 contribution rate points less per child.

Meanwhile, the care allowance for those in need of care at home, which was last increased in 2017, is to be raised by 5 percent at the beginning of 2024. Subsidies for inpatients at care homes are also to go up next year.

From 2024, support for people who are temporarily unable to work due to the care needs of a relative will also be expanded. In future, relatives will be able to claim the care support allowance for up to 10 working days per care case per calendar year.

What’s changing with pensions?

The Bundesrat on Friday also passed a pension increase. For the second year in a row, there will be a hike for the 21 million pensioners in Germany.

In western Germany, the payments will increase by 4.39 percent and in eastern states by 5.86 percent.

For a monthly pension of €1,000, pensioners in the west will see about €44 more, while those in eastern German states will see around €60 extra per month.