Germany’s Nursing Care Overhaul: €22.5 Billion Deficit Looms as Contributions Rise and Benefits Tighten

Germany unveils €11B annual savings to address €22.5B care insurance shortfall, raising levies on high earners and childless contributors, while cutting home-care subsidies and family caregiver pensions.

Germany’s long-term care insurance system is headed for a combined shortfall of €22.5 billion over the next two years, according to official projections. That gap has driven the government to unveil an €11 billion annual savings package that targets high earners, childless contributors, and care recipients alike.

Health Minister Warken (CDU) presented the draft Nursing Care Reorganisation Act (Pflegeneuordnungsgesetz, PNOG) on 5 June. The plan aims to avert a financial collapse in a sector already strained by an estimated 200,000 unfilled positions. Rising departures among care staff have deepened what experts call a systemic erosion of care capacity.

Higher levies on better incomes

From January 2027, the contribution assessment ceiling will rise to the same level as the annual earnings threshold for Germany’s statutory health insurance. That move affects roughly six million employees earning above the current cap and is expected to bring in an extra €1.6 billion per year.

Childless contributors will see their contribution rate climb to 4.3 per cent, a change that also applies to workers in mini-jobs. Together, the overhaul of mini-job contributions is forecast to generate €1.2 billion annually. From 2028, the free spousal co-insurance will be scrapped entirely.

Longer wait for home-care subsidies

Residents of nursing homes will face a steeper climb before receiving financial relief. The waiting period for means-tested care subsidies will double to 18 months, up from the current 12 months. That single change is expected to save €2.6 billion in 2027 alone.

Average out-of-pocket costs in Mecklenburg-Western Pomerania already run at €2,903 per month, according to data cited by critics. The Paritätische Welfare Association warns that rising individual contributions risk pushing families into financial distress.

The state’s health minister, Drese (SPD), along with state premier Schwesig (SPD), has rejected the draft. Both argue the reform places a disproportionate burden on those in need of care and their relatives.

Family caregivers face pension hit

Another contentious element: from 2027, long-term care funds will cover only 70 per cent of the pension insurance contributions for family members who provide unpaid care. The measure is projected to save roughly €1.9 billion annually. Health economists caution that this increases the risk of old-age poverty, especially for women, who make up nearly three-quarters of family caregivers.

Partial sick leave as a parallel initiative

Separately, the federal government is preparing to introduce partial sick leave (Teilkrankschreibung). Employees who have been unfit for work for more than four weeks may voluntarily return to their jobs at reduced capacity. Doctors will certify partial incapacity in stages of 25, 50 or 75 per cent, provided the employer agrees.

Modelled on Scandinavian practice, the scheme is intended to ease the return to work after illness. Officials estimate savings of €40 million in 2027, rising to €160 million by 2030.

Political battle ahead

The demographic pressure underlying the reforms is relentless. Without action, policymakers warn, the entire care insurance system will slide into a massive financial imbalance. The cabinet is expected to approve the draft before the summer recess, but opposition from state governments and social welfare organisations is fierce, leaving the final shape of the law far from settled.