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Challenges in Long-Term Care Insurance
2024-10-07 09:00:11
Health
Finance
Economy

Challenges in Long-Term Care Insurance

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The financial viability of long-term care insurance is increasingly precarious, with reports indicating potential insolvency by February. To avert this crisis, discussions within the coalition are considering a necessary premium increase of 0.25 to 0.3 percentage points.

This adjustment, alongside another anticipated rise in health insurance contributions, could lead to the steepest escalation in social contributions in over two decades. Currently, the standard rate stands at 3.4%, with higher rates for childless individuals.

The situation underscores a pressing need for reform, as the burden of care falls disproportionately on those requiring social assistance, while wealthier individuals benefit primarily from inheritance protection. The status quo demands urgent reevaluation to ensure sustainable support for all.

Related news on that topic:

Impending Insolvency Threatens Germany's Long-term Care Insurance

Germany's long-term care insurance faces significant financial challenges, with insolvency looming as early as February. Reports indicate that a contribution increase of 0.25 to 0.3 percentage points is under discussion to avert bankruptcy and ensure financial stability until spring 2026. This potential rise comes alongside an anticipated 0.7 percentage point increase in health insurance contributions, marking the highest social contribution surge in over two decades. Currently, the contribution rate stands at 3.4%, with childless individuals paying 4%, and families receiving deductions. The financial strain stems from increased care costs, a growing number of beneficiaries, and reforms that have provided relief to care recipients but also necessitated higher contributions. As the demographic landscape shifts, the pressure on the care system intensifies, prompting urgent discussions within the government. Federal Health Minister Karl Lauterbach plans to introduce a financial stabilization concept to address these challenges. Despite the ministry's disagreement with insolvency reports, it acknowledges structural issues exacerbated by higher wages and an expanding pool of care dependents. The looming deficits are substantial, with predictions of a 1.5 billion euro shortfall in 2023 and a 3.4 billion euro deficit in 2024. The proposed contribution hikes aim to cover these gaps, though they pose a significant burden on individuals, particularly those with fixed incomes like retirees. The government is exploring various solutions, including tax reliefs and shifting responsibilities between insurance sectors. However, the complex economic and demographic factors at play make finding a viable resolution imperative to prevent a systemic breakdown in care provision.

Navigating Financial Turbulence in Long-Term Care Insurance

Germany's long-term care insurance faces significant financial challenges, with concerns about potential insolvency looming. Despite a recent increase in contributions, the rising number of individuals requiring care and the high costs associated with limiting out-of-pocket expenses for nursing home residents have strained resources. The projected deficit could exceed 4 billion euros by 2024, highlighting the urgency for corrective measures. Federal Health Minister Karl Lauterbach has announced plans for a comprehensive reform aimed at stabilizing the system. He reassures that insolvency is not imminent, despite reports suggesting otherwise. The reform is expected to address financing structures, family caregiver support, and include elements of digitalization. There are several proposed solutions to avert the crisis. These include increasing contributions by 0.25 to 0.3 percentage points, utilizing tax funds to cover pandemic-related expenses, and considering grants for pension contributions made by family caregivers. Additionally, a reform of medical treatment care is on the table, although any reduction in social benefits is unlikely during an election year. Critics, including members of the Union faction and social associations, stress the need for swift action, urging for more inclusive insurance models and broader contribution bases that could involve civil servants and self-employed individuals. As the government works on a "notoperation" to secure the system's financial health, the focus remains on ensuring that care services continue to meet the needs of Germany's aging population. Lauterbach's reform, expected soon, aims to provide both short-term relief and a sustainable path forward.

Read 1 more recent news on this topic

The press radar on this topic:

Frankfurter Rundschau
6. Oktober 2024 um 16:37

Social, but not for everyone

Politics
Finance
Economy
Long-term care insurance is a cost driver of social insurance; premium increases are accepted, but a debate on the orientation is necessary, as more and more people in need of care require social assistance, while the wealthy only receive inheritance protection, which is not a task of the welfare state.
rp_online
7. Oktober 2024 um 04:33

Rising social contributions?: Long-term care insurance could be insolvent according to media reports in February

Economy
Politics
According to the Redaktionsnetzwerk Deutschland and coalition circles, the long-term care insurance is threatened with insolvency in February. A contribution increase of 0.25-0.3 percentage points is being discussed to be financially secured by spring 2026 and prevent bankruptcy. This would come in addition to an expected increase of 0.7 percentage points in health insurance, so that social contributions could rise at the beginning of 2025 as strongly as they have not done in over 20 years. The..
Tagesspiegel
7. Oktober 2024 um 04:37

Financial situation worse than expected: Statutory long-term care insurance apparently faces insolvency in February

Politics
Finance
According to media reports, the financial situation of the statutory long-term care insurance is significantly worse than previously known. In the traffic light coalition, talks are underway on how to prevent an impending insolvency in February. The government expects a need for an increase in the contribution rate of 0.25 to 0.3 percentage points to ensure financing until the 2025 federal election.
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