Germany proposes major long-term care insurance reform

The German government has proposed a major reform of the statutory long-term care insurance system via the Pflegeneuordnungsgesetz (PNOG) to address a projected deficit. While earlier estimates suggested an eight-billion-euro deficit by 2027, the Federal Cabinet’s approved draft indicates the shortfall could reach approximately 7.6 billion euros in 2027 and potentially exceed 15 billion euros by 2028.

A central component of the reform is the replacement of the current care allowance (Pflegegeld) with a new relief budget (Entlastungsbudget) effective January 1, 2027. This budget is designed to cover cash payments, care aids, and replacement care services. The reform also includes stricter criteria for determining care levels 1 through 3 and the planned abolition of the 131-euro monthly relief amount for care level 1.

To manage the transition, applications submitted before the December 31, 2026, deadline will be evaluated under current, more lenient regulations. To accommodate a surge in applications, the law includes provisions to extend standard processing deadlines during the first four months of 2027. For those newly classified with care levels 2 or 3, the proposed relief budget would be halved for the first three months of eligibility.

Financing the measures involves increasing contributions for childless individuals by 0.3 percentage points, raising the contribution assessment ceiling by 3,600 euros, and applying a 0.52 percent surcharge for certain spouses or partners. The general contribution rate is intended to remain at 3.6 percent. The reform is currently in the parliamentary process.