German cabinet approves care reform raising childless contribution rate to 4.5%

Cabinet agreement and implementation timeline

The German federal cabinet adopted the draft Care Reorganization Act (Pflegeneuordnungsgesetz) on 30 September 2026 following negotiations between CDU/CSU and SPD coalition partners. The legislative package aims to stabilize the long-term care insurance fund against demographic pressures and widening deficits. Most provisions are scheduled to take effect on 1 January 2027, followed by additional phases through 2029, though the bill still requires approval from the Bundestag and Bundesrat.

Contribution increases for childless workers and high earners

The core fiscal measures focus on increasing revenue from specific contributor groups. The supplementary contribution rate for childless employees aged 23 and older will increase by 0.3 percentage points from 0.6% to 0.9%, bringing their total care insurance contribution from 4.2% to 4.5%. The standard contribution rate remains at 3.6%. The government projects the higher childless surcharge will generate approximately 3.3 billion euros in additional revenue in 2027.

The monthly income assessment ceiling (Beitragsbemessungsgrenze) will rise from 5,812.50 euros to 6,375 euros in 2027, of which 300 euros stems directly from the reform. For high-earning childless employees, monthly contributions will rise from approximately 140 euros to 172 euros. From 2028, employees who co-insure non-working spouses without separate contributions will pay an additional surcharge of 0.52 percentage points (nearly 21 euros monthly at a gross wage of 4,000 euros). Exemptions apply to families with children under 12, caregivers assisting individuals at care level 2 or higher, pensioners, and care recipients. Furthermore, regular annual benefit adjustments tied to core inflation will begin in 2029, while the dynamization previously planned for 2028 has been dropped.

Dispute over co-payment caps and structural reforms

An expert commission has been tasked with drafting broader structural proposals by the end of January 2027. However, coalition members remain divided over the scope of the commission's work. Federal Health Minister Carsten Linnemann rejected the SPD proposal to cap residential nursing home co-payments, which currently exceed 3,000 euros per month.

A cap is highly dangerous.

Linnemann argued that capping co-payments at 1,500 euros would save residents only about 300 euros while incentivizing care homes to inflate costs. SPD deputy parliamentary leader Dagmar Schmidt maintained that the commission's mandate includes setting a cap to protect families from rising care costs. Health economist Heinz Rothgang noted that while a 1,500-euro cap provides limited initial relief, political agreement is necessary because co-payments continue to rise annually.

Pushback from insurers, business, and social groups

The cabinet decision drew criticism across healthcare associations and political factions. Andreas Storm, chief executive of health insurer DAK-Gesundheit, questioned the widening contribution gap between parents and childless workers.

3.6 percent general contribution and 4.5 percent for childless people, constitutionally we have arrived in a questionable dimension here.

Techniker Krankenkasse chief executive Jens Baas urged the federal government to fund non-insurance responsibilities through general taxation rather than contributor levies. Wolfgang Steiger, secretary general of the CDU Economic Council, warned that expanding the assessment ceiling harms economic dynamism, though he welcomed the emphasis on rehabilitation before care. German Social Association (SoVD) chairwoman Michaela Engelmeier criticized the government for failing to reimburse 5.2 billion euros in pandemic-era care costs. CDU/CSU parliamentary group leader Thorsten Frei confirmed that the broader coalition agreement also includes phasing out retirement at 63.