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MONEY

How will the 2024 budget affect foreigners in Germany?

Foreigners living in Germany will see some social services increasing in 2024 - but also grapple with budget cuts in core areas of their everyday lives. We lay out what to expect.

Published: 21 September 2023 17:14 CEST
A piggy bank
A German piggy bank with euro notes. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Over the summer, Germany approved its much debated budget for 2024, which is to be officially adopted in November.

Some expenditures are increasing, namely those for defence. The German government has already set aside €51.8 billion in military spending for 2024, up from €50 billion this year. This puts it at the NATO-set target of two percent of each member state’s GDP.

The Bundesrepublik has for years been criticised that it did not meet this quota, but for the first time is set to – and even exceed it – as it increasingly strives to revamp its flailing Bundeswehr and lend more support to Ukraine.

But to budget for this increase – among others – without going into debt, it’s also cutting certain services which affect foreigners in Germany. Here’s what you need to know.

READ ALSO: German government approves belt tightening budget for 2024

Elterngeld is being halved

Many move to Germany for higher paying jobs which the country offers, particularly in STEM fields. But couples and individuals who have a taxable income of more than €150,000 per year will no longer qualify for Elterngeld (parental allowance) when they go on parental leave.

Previously the benefit was available to couples earning less than €300,000, or €250,000 for single parents. The move is expected to affect around 60,000 families in Germany.

READ ALSO: ‘A horrible idea’: How cuts to Elterngeld will affect families in Germany 

Less funding for trains

For years the German government has vowed to refurbish its rail services, which are notorious for their frequent delays and cancellations. It had even set aside €45 billion for Deutsche Bahn in a far-reaching climate package passed in March. Yet the government has now said it will currently only fund the rail service “as far as financially feasible”.

For environmentalists, this was a double whammy as the budget still includes tax breaks for motorists – something which the Green Party has pushed Finance Minister Christian Lindner (FDP) to scratch out. 

But train enthusiasts looking to explore Germany and beyond can still look forward to speedy services coming out in the coming months, often in partnership with Austrian and French rail lines. And despite talk of raising the price, the Deutschlandticket is still set to be available for just €49 a month (at least for the moment).

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern.

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern. Photo: picture alliance/dpa/KEYSTONE | Peter Schneider

Reducing funds for digital services

Germany has become woefully well-known for its lack of digital services available, include many which would make the lives of foreigners much easier such as an online Anmeldung or renewing a visa digitally with the immigration offices.

This has steadily been improving, especially since Germany passed an Online Access Act (OZG), to significantly increase such services. But for this year the Interior Ministry has earmarked €3.3 million for the digitalisation of administration and administrative services next year – compared to €377 million this year.

It’s true that many German politicians – including Chancellor Olaf Scholz (SPD) – are pressing for digitalisation in part to persuade more foreigners to come to, and feel comfortable in, Germany. But with the lack of funding, a digital revolution may take a bit longer than hoped. 

READ ALSO: Is Germany a failed state for digital public services?

Higher health care contributions

The one billion budget for long-term health insurance (Pflegeversicherung) is being axed, but the gap is being made up for by higher health care contribution rates which were adapted in July of this year. However some people, such as those with children, have seen their contribution rates decrease slightly. 

READ ALSO: German health insurance contributions ‘to increase in 2024’

More social benefits

The budget may seem to spell doom and gloom for many, but it’s also giving some social services a major boost. Germany’s new unemployment benefit, Bürgergeld, will go up by €23.8 billion in 2023 to €24.3 billion next year.

An additional €127 billion is being allocated to pension insurance (Rentenversicherung), which Germany sees as sorely needed as its population ages and the cost of living – with an inflation rate that sits over six percent – rises.

Foreigners who are accessing some social benefits or their pension could benefit from these changes. 

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HEALTH

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

Social contributions could be set to rise yet again in Germany with a potential hike in the cost of long-term care insurance. Here's what you need to know.

Published: 28 May 2024 13:32 CEST
Why long-term care insurance fees are likely to rise in Germany next year

Following a rise in additional health insurance fees at the start of the year, insurance funds have warned that a further hike in fees could be needed.

Speaking to the regional Rheinische Post, several statutory funds revealed that rising costs could be placed on the shoulders of workers in Germany as early as next year. 

Why are health insurance companies threatening a hike in fees?

Though the healthcare system in Germany is relatively complicated, the reason for a potential rise in care contributions is a simple one: there just isn’t enough money to fund the sector.

According to the Rheinische Post, health insurance funds are forecasting a huge black hole in their finances at the start of next year and expect to bring in just a third of what they need in order to meet demand.  

“The long-term care insurance funds assume that the financial resources in the first quarter of 2025 will amount to less than one month’s expenditure,” the Association of Statutory Health Insurance Funds in North Rhine-Westphalia told the regional newspaper. 

“In this case, the federal government may raise the contribution rate by statutory order.”

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

Fears about the financial future of care were shared by Verena Bentele, the president of the VdK social association. Speaking on RBB, Bentele argued in favour of propping up the struggling care sector using tax revenues. 

“It one of society’s important tasks to subsidise care from tax revenue if the system would otherwise collapse,” she said. 

How much could insurance contributions rise by?

This isn’t entirely clear so far, though experts in the sector have suggested than the rise would be relatively incremental.

According to Andreas Storm, the CEO of the DAK insurance fund, 0.2 percent is a plausible number.

Currently, people with children pay 3.4 percent of their income into the long-term care funds, while childless people pay four percent. For those in employment, however, the contributions are split between the worker and the employer, meaning most people pay either 1.7 percent or two percent each month.

Self-employed people, meanwhile, are usually required to cover the full cost of social contributions themselves, meaning this group could be hit hardest by any potential hike in fees. 

What other issues are affecting long-term care in Germany?

Alongside the difficult financial situation, the care sector – like many other professions in Germany – is also struggling to plug a shortage of skilled staff, according to the German Council of Nurses. 

According to the council’s president, Christine Volger, there is already a shortage of around 115,000 full-time professionals in the care sector, which could rise to 500,000 by 2034.

One major issue is Germany’s aging population, with longer life expectancies increasing the demand for long-term care at the same time as qualified employees enter retirement. To make matters worse, many of the nurses in the sector also opt for part-time work. 

Nursing home in Baden-Württemberg

Elderly patients play a fitness-focussed ball game at a nursing home in Burladingen, Baden-Württemberg. Photo: picture alliance/dpa | Bernd Weißbrod

“The gap between supply and demand is worsening,” Volger told Bild. 

On Monday, Health Minister Karl Lauterbach (SPD) said Germany had experienced an “explosive” rise in the number of people needing care, with 360,000 new patients requiring support in 2023. 

READ ALSO: Germany sees ‘explosive’ hike in people needing old-age care

The Medical Service of the Health Insurance Funds (MDK) also expects a big hike in care cases due to the prevalence of dementia.

If there is no breakthrough in therapy and prevention, the number will continue to rise sharply, Carola Engler, deputy chairwoman of the MDK, told the Augsburger Allgemeine newspaper.

There is already evidence of this happening: in 2023, health insurance funds processed around 160,000 more applications for dementia care than in 2022. 

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