Rising care and pension costs: What taxpayers need to know now”

Rising care and pension costs: What taxpayers need to know now”

The financial situation of those in need of care in Germany is becoming increasingly precarious. The traffic light coalition is planning massive savings in pension and nursing care insurance, which could have a direct impact on the individual contributions of the insured. This could affect not only those affected, but also society as a whole.

Rising care costs – a heavy burden for families

According to a current evaluation by the Association of Substitute Insurance Funds (vdek), those in need of care in Germany now pay an average of 2,871 euros per month for their stay in a nursing home in the first year. This sum has increased by 211 euros compared to the previous year. A look at the following years shows that the additional payments for the following years also increase continuously: for the second year it is already 2,620 euros, which means an increase of 233 euros.

Health Minister under pressure

In view of the increasing personal contributions, Health Minister Karl Lauterbach (SPD) is calling for measures to limit these financial burdens. Although higher contributions were announced for July 1, 2024, it is still unclear what exactly the support for those affected will look like. A limitation could significantly increase statutory nursing care insurance contributions in the long term, which will meet with resistance from many contributors.

Pension insurance as a government piggy bank

The Traffic Light Coalition's current budget draft for 2025 makes it clear that the federal government intends to transfer two billion euros less to the pension insurance system than originally planned. These cuts mean that the German Pension Insurance (DRV) will have to rely more heavily on its reserves to secure the pensions of over 21 million people. Experts criticize that the pension fund is being misused as a “savings bank” to close other financial gaps.

Contribution increases and their impact on households

From 2028, the pension insurance contribution rate is expected to rise from 18.6 to 20.1 percent, which will have a noticeable negative impact on the net income of many contributors. A table clearly shows how this increase could affect different income levels, with amounts ranging from 186 euros to 502.50 euros per month being lost.

Health care reform under pressure – health insurance companies have to react

Another problem is the increasing pressure on statutory health insurance companies. As of January 1, 2024, 45 health insurance companies have already increased their contribution rates, and the general contribution rate is currently 14.6 percent. Anne-Kathrin Klemm from the umbrella organization of company health insurance companies warns that in extreme cases the additional contribution could rise to 2.45 percent, which would result in significant financial losses for those with statutory health insurance.

Importance for society

The measures taken by the traffic light coalition to cut pension and care financing could not only increase the economic burden on individuals, but also have serious social consequences for society as a whole. If more and more people get into financial difficulties, the risk of poverty in old age and social inequality increases.