Long-term care: "New generational contract" could lower premiums
03.06.2025 17:52
With the „New Generational Contract for Care”, the Association of Private Health Insurance Companies (PKV) demonstrates how statutory long-term care insurance can be stabilized and the contribution burden, especially for younger people, can be permanently reduced.
In light of the increasing strain on contributors and businesses, the private health insurance association is calling for a rethink of long-term care financing. The concept presented in Berlin on Monday proposes enshrining the current level of benefits in statutory long-term care insurance and relying more heavily on private insurance in the future. This could significantly reduce contribution rates by 2045, thereby providing financial relief for employers and employees.
„A new intergenerational contract for long-term care is urgently needed. Only with more capital-funded provision and personal responsibility can long-term care insurance be made future-proof and the overburdening of younger generations be prevented,“ emphasizes Florian Reuther, Director of the Private Health Insurance Association.
Rising social security contributions jeopardize intergenerational fairness and Germany's economic competitiveness.
The social security contribution rate, at over 40%, has long since exceeded the economic stability target and will continue to rise without reforms. The forecast for long-term care insurance is particularly alarming: the contribution rate could climb to as high as 6.95% by 2045. This would place a heavy burden on the younger generation, who would have to pay significantly higher contributions than their parents throughout their working lives.
This is how the „New Generational Contract“ works“
The "New Generational Contract" proposes lowering the contribution rate to the statutory long-term care insurance (SPV) by ensuring that benefit expenditures rise less sharply than revenues. This would allow the younger generation, with a comparable overall financial burden, to afford full coverage of long-term care costs through supplemental long-term care insurance. For the first time in a branch of social security, debt burdening the younger generation would be reduced to zero.
Older people who are no longer able to build up additional private savings could receive a transitional subsidy based on actual care costs. This adjustment would then be gradually reduced, staggered according to birth year. For people under 60, the subsidy would remain at its current level. They would thus be the first generation that has to make their own provisions for future increases in care costs.
Strengthening capital-funded private pension schemes
To address the ever-increasing challenges in long-term care, the CDU/CSU and SPD agreed on a major long-term care reform in their coalition agreement. A joint federal-state working group is to develop proposals for this reform later this year. "The private health insurance sector is prepared to constructively contribute its expertise in intergenerational long-term care provision, built up over four decades, to the commission on long-term care reform. It is clear that expanding the pay-as-you-go system or providing additional tax subsidies is not a sustainable solution," explains Florian Reuther, Managing Director of the German Private Health Insurance Association (PKV).