The legislature must make the contribution system for long-term care insurance more family-friendly and give parents relief in proportion to the number of children they have. Politicians have until July 31, 2023 to do this.
With this Senate decision published on Wednesday 26, May, the Federal Constitutional Court has given complaining parents a partial success. On the other hand, the court rejected the financially much more serious demand for the introduction of child allowances in the statutory pension and health insurance system.
The educational effort is sufficiently compensated in the system of pension and health insurance. In the pension insurance, this is done primarily through the recognition of child-rearing periods. In statutory health insurance through non-contributory family insurance. The First Senate decided that this would avoid unconstitutional discrimination against parents in these insurance branches.
Rejections also create clarity
Family associations expressed their satisfaction with the decision on long-term care insurance. “But unfortunately it only affects the economically most insignificant of the three branches of social insurance,” said Ulrich Hoffmann, President of the Family Association of Catholics.
“In pension and health insurance, the dismissal of the constitutional complaints makes it clear that family-friendly social security contributions can only be achieved through political means,” says Klaus Zeh, President of the German Family Association.
On behalf of the German Trade Union Confederation, DGB board member Anja Piel praised: “The Federal Constitutional Court made a wise decision not to demand any further consideration of children in health and pension insurance.” Regardless of this, “a fair burden sharing across society is necessary,
For the FDP parliamentary group in the Bundestag, its deputy chairman Lukas Köhler welcomed the “differentiated decision” of the Karlsruhe court. Even today, child-rearing services are compensated for by a higher entitlement to benefits in both health and pension insurance. “In contrast, additionally reduced contribution rates for parents would result in a disproportionate additional burden for the other insured persons or the taxpayers.”
The Federal Constitutional Court decided on two constitutional complaints from parents from Freiburg and a submission from the Freiburg Social Court.
The starting point was the so-called long-term care insurance ruling of the Karlsruhe judges in 2001. At that time, the constitutional court found that it violated the principle of equality and the fundamental right to protect the family that members of the social long-term care insurance system who cared for and brought up children paid the same high contribution to long-term care insurance would have to like members without children.
Since 2005, childless people have had to pay a surcharge. Since January 1, 2022, this surcharge has been 0.35 contribution rate points, which are added to the current contribution rate of 3.05 percent.
Multiple mothers disadvantaged
The plaintiff parents are of the opinion that with this measure alone the legislature did not implement the 2001 nursing judgment correctly in accordance with constitutional law. It makes an economic difference how many children you look after and raise. That is why parents with more children should be given more relief in long-term care insurance. The Karlsruhe court has now essentially followed this argument.
It must be acknowledged that since 2001 the legislature has taken or expanded numerous measures for general equalization of family burdens. Nevertheless, mothers with several children are much less likely to be employed and to a lesser extent than mothers with fewer children. This disadvantage is “not sufficiently compensated for” in the long-term care insurance, the court criticizes in its decision. It is not enough for all children to receive insurance cover with the same contributions from their parents. After all, the risk of children needing care is low, argues the First Senate in Karlsruhe.
The legislature has a great deal of leeway
The legislature must now find a way of financing the relief for parents with several children in long-term care insurance required by the Karlsruhe court. The Federal Ministry of Health announced on Wednesday that the necessary proposals for adjustments would be “quickly developed.”
The First Senate makes it clear that the legislature is not forced to demand more solidarity with the parents of many children from childless and then also from parents with fewer children. Other solutions are also conceivable.
A spokesman for the Federal Ministry of Health emphasized that there are no constitutional requirements as to which of these options should be chosen. From the point of view of the president of the nursing employers’ association, Thomas Greiner, the Karlsruhe decision increases the pressure on the federal government to engage in a public discussion about the financing of nursing care.
The previous “blinders strategy” must come to an end.
Explanation: Why large families pay less for German care insurance
On Wednesday 26, May, the Constitutional Court in Karlsruhe ruled that parents with more than one child must pay a reduced rate of care insurance compared to people with fewer children – or those who do not have them at all.
The case was filed by 376 families as part of a campaign called the Elternklage (Parents’ Complaint), supported by the Federation of Catholic Families of the Archdiocese of Freiburg. Families argued that the amount of health, pension and care insurance they pay for should be directly related to the number of children they have.
Because raising a family costs time and money, this contribution to society should be taken into account when setting insurance rates, and those with more children should pay lower contributions, say parents.
What does the current law say?
Now, Care insurance – a type of social security designed to finance care for the elderly – is already paid by parents and non-parents at different rates. From the beginning of 2022, people without children pay 3.4 percent of their income for social services, and parents – 3.05 percent of income.
The decision on two different tariffs dates back to a previous court decision in 2001. The judges then ruled that levying fines on children and those who do not have the same amount of care insurance is against the Basic Law. This is because, according to the judge, parents pay a “generative contribution to the functioning of the social security distribution system” as their children return to the bank later in life. A two-tier system for people with and without children was soon adopted.
However, the judges ruled against reducing pension or health insurance contributions for parents. They said the state is legitimate to subsidize parents in other ways, such as through free education or supplementing pensions for people who have started a family.
So if parents already pay less, what’s the problem?
According to the plaintiffs, the 2001 ruling made a false equivalence between small and large families and did not fully take into account the loss of income, time and expenses associated with raising children.
Lawyers argued that in raising children and caring for the older generation, plaintiffs suffered double the loss of wages, and pointed out that women’s pensions are often much lower than men’s because of the time spent raising children.
The Federation of Catholic Families also suggested that families did not actually receive free medical care for their children. This is because the parents’ contributions are calculated only from their total salary, which means that the number of children in them and the associated costs are not taken into account.
And what were the counterarguments?
Responding to the constitutional complaint, a spokesman for the Ministry of Health said that the costs of raising a child should be borne by society as a whole, not by some insurance fund.
The National Association of Compulsory Health Insurance Funds (GKV) noted that children may not necessarily grow up and pay into the same insurance bank as their parents, making it difficult to calculate parental contributions based on future children. Some children may grow up and move abroad, which will mean they will pay in full to another pension or health fund, they noted. GKV advocated for reimbursement to parents through child benefits rather than through reduced insurance premiums.
Did the judges agree with the plaintiffs?
Partly – but only on the issue of care insurance. According to the judges, the 2001 ruling did not take into account the number of children in the family. The more children in the family, the more effort and associated costs for parents, they write in a statement announcing the ruling.
“This defect arises even from the second child,” the report said. “Setting the same contribution rate for parents regardless of the number of children they have is not constitutionally justified.”
As for health insurance and pensions, the plaintiffs disagreed.
They said that the time allotted to parents to take care of their children is already included in the legal pension system, and pointed out that in adolescence and childhood people enjoy free medical care under their parents’ health insurance.
What is happening now?
The court gave the government until July 31, 2023 to introduce a conical system with larger discounts for large families.
Speaking to RND on Wednesday, Health Minister Karl Lauterbach (SPD) said his ministry would amend the law within an agreed timeframe. He said officials would carefully consider the rationale for the ruling and see how best to apply it to the new tariff system.
However, Lauterbach stressed that the social assistance system still requires adequate funding. “We also want to address this,” he said.