The German long-term care insurance contribution rate will rise by 0.2 percentage points starting January 1, 2025, as confirmed by the Federal Council (Bundesrat) on Friday. This adjustment raises the total contribution rate for insured individuals with children to 3.6 percent, and for those without children, it will increase to 4.2 percent. The German government estimates the new regulation will yield approximately 3.7 billion euros in additional revenue for the social long-term care insurance fund, addressing the pressing financial demands of the system amid demographic shifts and rising care needs.
Health Minister Karl Lauterbach emphasized the urgency of this issue, noting, "Without the increase, we risk system failure," highlighting the balance between the growing number of people requiring care and the diminishing number of contributing members. The backdrop to this contribution hike includes the unprecedented rise in the number of those needing care, which has escalated faster than previously anticipated, especially during 2022 and 2023.
The recent approval by the Bundesrat marks another step in managing the financial sustainability of the long-term care insurance system. The last contribution increase took effect back in mid-2023, but the mounting costs associated with care, especially due to increased wages for care workers following collective demands, necessitated this timely adjustment.
Families with multiple children will enjoy tiered reductions: those with two children will see their contribution go down to 3.35%, those with three children will pay 3.1%, and contributions continue to decrease with the increase of family size, reaching as low as 2.6% for families with five or more children. It is important to note, though, the incorporated employer share of 1.8% remains the same across the board.
Verena Bentele, president of the social association VdK, remarked on the insufficiency of the current increase, stating, "The increase is necessary to secure the benefits for those requiring care. Yet it is clear already now, the increase of 0.2 percentage points will not be sufficient." This statement echoes the sentiment among several advocacy groups who argue for immediate comprehensive reforms to provide lasting solutions.
Financial challenges stemming from the COVID-19 pandemic also play a significant role, as care funds were obligated to cover pandemic-related expenses, such as testing and staff bonuses, which exacerbated the funding gap. Experts believe these concerns could compel the new government to reevaluate the entire funding framework of the care insurance system.
Such pressures are not merely academic; according to reports, if contributions do not suffice, the financial solvency of key nursing care funds could remain at risk, leading to potential delays or deficiencies in care provisions. This scenario places additional responsibility on lawmakers to deliver effective governance and avert looming crises.
The GKV Association, representing statutory health insurers, voiced serious concerns as well. Doris Pfeiffer, the chief executive of the association, stated succinctly, "Permanent increases cannot be the solution," indicating apprehension over the ad hoc nature of the recent adjustments. This viewpoint highlights the pressing need for systemic change rather than reactive adjustments to contributions.
Looking forward, stakeholders stress the necessity for large-scale reforms, as many are projecting yet another increase could be necessary even before the next Bundestag convenes. The impending challenge lies for the new government, tasked with creating clear mechanisms to establish long-term funding solutions for care services.
While the adjustment addresses immediate financial shortfalls, significant steps must be taken to reform the care finance system fundamentally to prevent future crises. Lauterbach previously mentioned such reforms were on the agenda but have recently encountered roadblocks due to the fracturing of the governing coalition. Resolute change will require commitment and brainstorming from all political parties, with many experts advocating for greater integration of public and private care systems to broaden financial contributions.
Potential solutions might revolve around the implementation of tax funding combined with modifications to private insurance at large, offering fair coverage for all socio-economic segments of society. Discussions are also expected to beg the question of capping self-paying contributions for those cared for, to alleviate burdens faced by families dealing with these emotional and financial challenges.
Overall, the hike to long-term care insurance contributions starting January 2025 is emblematic of both the urgent care demands from society as well as the growing financial obligations placed on both consumers and insurers during these challenging times. Although the increase will bring additional funds to the system, serious reform discussions will be necessary to secure its future viability for all utilizing and relying on it for support.
