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HEALTH

What to know about Germany’s long-term care insurance hikes

Germany has agreed on a controversial long-term care reform that will see people - especially those without children - pay more towards insurance.

A care worker helping a patient in Germany.
A care worker helping a patient in Germany. Photo: picture alliance/dpa | Sebastian Gollnow

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.

READ ALSO: What foreigners need to know about old age care in Germany

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.

READ ALSO: What you need to know about the complicated world of German insurance

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.  

German Health Minister Karl Lauterbach SPD

German Health Minister Karl Lauterbach (SPD) speaks at an event run by the Social Affairs Association in Berlin. Photo: picture alliance/dpa | Christophe Gateau

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.

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HEALTH

How much more residents in Germany might have to pay for health insurance

People in Germany saw an increase in health insurance costs at the start of the year. It's now expected that they will be hiked up again next year.

How much more residents in Germany might have to pay for health insurance

Health insurance organisations are warning that costs will be hiked up again soon due to concerns over funding. 

Doris Pfeiffer, CEO of the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband), told Germany’s Tagesschau that insurance funds are expecting a billion-euro deficit.

She said it was a tough year “because we don’t have particularly good prospects”.

For people paying statutory health insurance, things could become more expensive next year. Around 90 percent of people in Germany are covered by statutory health insurance.

The contribution rate is fixed by law and stands at 14.6 percent. The additional contribution that the health insurance funds set for their members was raised to 1.7 at the start of this year. 

The latest increase gave statutory insurance funds the ability to charge up to 1.7 percent on top of the standard 14.6 precent contrinution, though not all insurance funds chose to do so.

The costs are split between the employer and employee, so workers in Germany would pay half of any increase. 

READ ALSO: Reader question: How can I change my German health insurance provider?

How much could additional costs rise next year?

Due to the funding issues, health insurers expect an increase of up to 0.6 percentage points to the additional contribution threshold. What this would mean for the insured depends on a few variables such as their income and their insurer.

Someone earning €2,000 gross per month, for example, would have to pay €6 extra per month if their insurer opted to increase additional contributions by this amount. Meanwhile, a gross income of €4,000 would mean €12 extra per month. The employer’s share would be added to this. 

health insurance cards

Many health insurance cards in Germany double as a European Health Insurance Card (EHIC), meaning that they can be used across Europe. Photo: picture alliance/dpa | Jens Kalaene

“That may not sound like much at first glance,” said Pfeiffer. “But there are people who earn very little for whom this is a lot – supermarket cashiers, lorry drivers.”

It comes following a rise in fees at the start of the year. From the start of 2024, additional contributions for statutory health insurance rose by around 0.1 percent in Germany.

Why are costs increasing?

The German healthcare system is one of the most expensive in the world.

As German society ages more, costs continue to rise – and the Covid pandemic didn’t help matters. The National Association of Statutory Health Insurance Funds estimates that this year alone it will cost around €314 billion to provide care for everyone who is insured. 

The money is mainly spent on hospitalisation costs and medical treatment.

READ ALSO: Why long-term care insurance fees are likely to rise in Germany next year

Health Minister Karl Lauterbach (SPD) has so far not presented any concrete proposals on how he intends to relieve the burden on health insurance funds in future.

Instead, the system is likely to face further expenditure. Lauterbach’s hospital reform is expected to drive up costs, while proposals to pay GPs more in order to combat the shortage of doctors would also push up expenses. 

READ ALSO: German ministers greenlight plan to improve healthcare at GPs

Pfeiffer called for a plan to tackle the rising costs.

“We now finally need an approach that puts this healthcare system on a new footing,” she said.

In the coalition government’s initial agreement back in 2021, the parties vowed to support health insurance funds with more tax revenue.

But as difficult budget negotiations take place, it doesn’t look like this will happen. 

This is causing friction among the coalition made up of the Social Democrats (SPD), Greens and Free Democrats (FDP). 

Green budget politician Paula Piechotta, for instance, is unhappy about this.

The opposition CDU/CSU also taken the opportunity to swipe at the government.

“This is not acceptable,” said CDU health politician Sepp Müller. “The tense situation in the social security system cannot continue to be ignored.”

However, it should be noted that there was no plan to help provide more money to statutory health insurance under the previous Health Ministry headed by the CDU’s Jens Spahn. 

When the SPD’s Lauterbach took over in 2021, there was already a funding gap of billions of euros. 

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