The potential bankruptcy looms over us, raising questions about the escalating supplementary contribution for legal aid.
The long-term care insurance system is currently facing a critical financial crisis. According to sources from coalition circles, the government is forecasting that the insurance might not be able to cover its expenses as early as February 2023 if no action is taken. Negotiations are underway within the coalition to discuss emergency measures to prevent bankruptcy.
The increase in contribution rate of 0.2 percentage points, which health insurance companies had predicted earlier, is reportedly not sufficient. The government, on the other hand, is estimating a need of 0.25 to 0.3 percentage points. This expectation is due to an anticipated longer period for government formation after the federal election in fall 2025. Consequently, the increase should be substantial enough to last until spring 2025.
At the moment, the general contribution rate in the long-term care insurance is 3.4%, while childless individuals pay 4%. Families with more than one child under 25 years old are entitled to reductions. An additional 0.3 percentage points increase in the long-term care insurance contribution rate would follow the expected 0.7 percentage point increase in health insurance contributions. This might result in a significant rise in social security contributions at the beginning of 2025, which has not been witnessed in over 20 years.
Recently, a legal opinion has compelled the federal government to fully compensate the long-term care insurance for the extra costs incurred during the Corona pandemic. This sum is estimated to be in the billions. According to DAK-Gesundheit, one of the health insurance companies, tasks such as financing Corona tests or paying care bonuses to employees are societal responsibilities that should be covered by tax funds. As per the DAK, the mentioned measures had led to additional costs of around 13 billion euros for the long-term care insurance. However, it remains unclear to what extent a reimbursement would alleviate the financial situation of the statutory long-term care insurance.
The financial strain on the long-term care insurance system could impact the wider economy. If the insurance cannot cover its expenses, it might lead to increased public debt, potentially affecting economic growth and stability.
Given the current financial crisis in the long-term care insurance system and the anticipated need for a substantial increase in contribution rates, the overall economic impact should not be overlooked.
