Germany implements care insurance reforms to address looming deficits

Germany is facing significant financial challenges within its long-term care insurance system, with the federal government projecting double-digit billion-euro deficits by 2028. To address this, the Federal Cabinet has approved the Pflegeneuordnungsgesetz (Care Reorganization Act) to increase revenue and limit expenditures.

Under the proposed reforms, high earners may face increased costs starting in 2027 due to a planned rise in the contribution assessment ceiling. The ceiling, which determines the income level up to which insurance contributions are calculated, is expected to increase by 300 euros per month in 2027.

The reform also aims to close loopholes in the pension system. Specifically, it seeks to prevent the use of the “Flexi-Rente” trick, where certain pension contributions made by long-term care insurance for family caregivers were being used to artificially inflate pensions in ways not intended by the original policy.

On a local level, the rising costs of care are placing a heavy burden on families. In the Kassel district, some residents report monthly out-of-pocket expenses for nursing homes reaching approximately 3,100 euros. Additionally, the sector faces criminal challenges, including investigations into large-scale billing fraud by nursing services in cities like Düsseldorf and Hamburg.