Health Minister Karl Lauterbach has announced a government reform which will see workers in Germany, especially those without children, pay larger contributions for long-term care insurance.

German government hikes long-term care insurance costs

After a new law passed through the Bundestag and Bundesrat on Friday, workers in Germany can soon expect to pay a higher percentage of their salary towards long-term care insurance. 

Long-term care insurance (Pflegeversicherung) is a social security contribution to which all workers and pensioners in Germany are obliged to pay. These contributions mean that if and when they need long-term care, such as in old age or after an accident, people in Germany have access to nursing services.

From July 1, people with children will have to pay 3,4 percent of their gross annual salary into long-term care contributions, an increase from 3,05 percent. People without children will have to pay 4 percent of their gross annual income, an increase of 0,6 percentage points on current rates.

Announcing the increase, Health Minister Karl Lauterbach said that there were four long-term factors which had informed the government’s decision to raise costs; rising wages, inflation, an increase in the number of people who need long-term care in Germany and that people now tend to need nursing care for longer periods.

Lauterbach pressed that increasing contribution rates now would mean that the financial resources would be there to provide care in the future. “The reform provides an additional total of 6,6 billion euros a year for nursing care insurance from 2025 onwards, which is when the reform will take its full effect for the first time,” the SPD politician explained.

Having more children will mean cheaper Pflegeversicherung rates

At the moment people in Germany who have children contribute 3,05 percent of their annual salary to long-term care insurance and people who don’t have children contribute a rate of 3,4 percent. 

The logic of this system is based on the assumption that people without children have a larger disposable income, so can afford to contribute more to Pflegeversicherung costs, and that people with children can also be financially and practically supported by their offspring in their old age, so will be less dependent on public care services.

However, from July 1, this policy will also take into account how many children people have: the more children people have, the smaller their mandatory Pflegeversicherung contribution will be. If people have more than one child, from the second to the fifth child that is under 25 they will pay 0,25 contribution rate points less per child.

Other changes in the reform include increasing the allowance for people who receive care at home by 5 percent from 2024 onwards. According to the plan, this amount will also increase with price developments between January 1, 2025 to January 1, 2028. Wage replacement payments for people who need to take time off work to care for relatives at home will be expanded and the number of calendar days per year that they can take off will be increased to 10.

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