Germany’s 2027 Care Overhaul: Higher Monthly Payments for Some, Total Loss for Others

A draft bill circulating since June 2026 would fundamentally restructure Germany’s long-term care insurance system, introducing new budgets for care grades 2 through 5 while eliminating a key benefit for the lowest care grade entirely. The government expects the changes to save roughly 400 million euros in 2027 alone.

Starting 1 January 2027, the current care allowance will be replaced by what officials call an “entitlement budget.” Monthly amounts would rise in nominal terms: 386 euros for care grade 2, 638 euros for grade 3, 889 euros for grade 4, and 1,079 euros for grade 5. Industry experts caution, however, that these figures are misleading because several previously separate payments will now be drawn from the same pot. These include the 42-euro monthly allowance for consumable care aids and funds for private replacement care. For people in grades 2 and 3, the annual increase is insufficient to cover these bundled costs. New recipients will also receive only half the budget during their first three months.

The sharpest blow falls on those classified with care grade 1. The existing monthly relief amount of 131 euros — worth 1,572 euros per year — disappears without replacement. The draft instead proposes a newly designed “care accompaniment” service, but provides no direct cash alternative. Social organisations point out that this money has often paid for household help or daily companionship. For grades 2 through 5, a “social space budget” of 175 euros per month replaces the old relief payment; people under 25 receive 300 euros. Unlike the current system, this budget cannot be saved across months — any unused portion expires at month’s end.

The reform builds on the 2023 Care Support and Relief Act (PUEG). Under previous rules, the next regular care allowance increase was scheduled for January 2028, tied to an estimated core inflation rate of 7.8 percent, capped by a wage-sum rise of 11.4 percent. The new draft fundamentally alters that adjustment mechanism: starting in 2029, increases will follow average core inflation of about 2.6 percent, with adjustments applied annually on 1 July.

Costs for nursing home residents continue climbing. In July 2026, the nationwide average monthly co-payment for residents in their first year reached 3,364 euros — 256 euros more than the previous year, driven largely by higher staffing expenses. The draft extends the subsidy scale for the care-related co-payment from 12 to 18 months.

Low-income earners face additional pressure from a planned change to the housing benefit law. A separate draft from 23 June 2026 would eliminate the annual 1,800-euro tax-free allowance for care grades 1 and 2 starting January 2027, unless the person also has a severe disability rating of 100 percent. Welfare associations warn that the combined measures increasingly disadvantage people with lower care needs, who often rely most heavily on the benefits being cut.

en | boerse | 69873458 |