Germany – New Contribution Rates for Nursing Care Insurance Begin July 2023

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In Germany, the costs for old age nursing care benefits are increasing annually.  To counteract this, the German Federal Council confirmed a draft law¹ on 16 June 2023², which includes an adjustment to the contribution rates tied to statutory nursing care insurance.  The contribution rate will change for every employee that is subject to German social security legislation as of 1 July 2023.  The contributions will be calculated based on the number and the age of the employee’s children.

The law enters into force on 1 July 2023.

In the past and until 30 June 2023, properly calculating the contribution rate per employee for statutory nursing care insurance has depended on whether an employee (who is older than 23) has children or not.

As of 1 July 2023, the contribution rates for statutory nursing care insurance will change for every employee that is subject to German social security law.  The effort to calculate the contributions correctly could add burdens to employers and payroll administrators.

Along with the number of children, the age of the employee’s children will also be decisive.  This means that the age of every employee’s child needs to be tracked continuously.

Please find below an overview of the contribution rates for statutory nursing care insurance that will be valid as of 1 July 2023:

Source: KPMG AG Wirtschaftsprüfungsgesellschaft

The contributions rate for employees with children is 0.6 percent lower than for employees without children.  As of the second up through the fifth child, there will be an additional relief for the employee of 0.25 percent per child.

Whilst the relief for the first child is valid for the employee’s entire life, the relief as of the second child is only valid until the child reaches 25 years old.  Specifically, the relief is valid until the end of the month in which the child turns 25 years old.

For German payroll run for July 2023, the information about the number and age of the employee’s children needs to be in place in order to pay the statutory nursing care contribution in the correct amount.  To help ensure that contributions are properly calculated and paid throughout, it is advisable to check now when the employee's children will be turning 25.  In the following month, the contribution to the statutory nursing care insurance must be adjusted accordingly if the employee has more than one child.

The number of children and their ages must be proven to the authorities.  The proper manner for providing proof has not yet been finally clarified.  To be ready once the proper manner is in place, we recommend that the certificates of birth for every child be requested of every employee as soon as possible.

In case information about the number of children and their ages is not timely in place for payroll run for July 2023, we recommend using the information that is already in place (“does the employee have children or not?”).  If it is known that an employee has children, but not how many, the employee can be treated as an employee with only one child.  

This will help make sure that contributions are not underpaid, which will prevent late payment penalties being imposed at a later point in time.

If such information is subsequently provided – that the employee has more than one child – the overpaid contributions may be refunded until 30 June 2025.

1  Bundesrat, Drucksache 220/23 (26.05.23), Gesetzesbeschluss des Deutschen Bundestages, "Gesetz zur Unterstützung und Entlastung in der Pflege (Pflegeunterstützungs- und -entlastungsgesetz - PUEG)."

2  Bundesrat, Drucksache 220/23 (Beschluss) (16.06.23), Beschluss des Bundesrates, "Gesetz zur Unterstützung und Entlastung in der Pflege (Pflegeunterstützungs- und -entlastungsgesetz - PUEG."

The information contained in this newsletter was submitted by the KPMG International member firm in Germany.