More children – less care allowance – finances

The Federal Constitutional Court helps families with many children with long-term care insurance, but not with pension and health insurance.

. Contributions to long-term care insurance must be scaled according to the number of children. By 1 August 2023 at the latest, many families with children will pay less than families with few children and insured without children. That has now been decided by the Federal Constitutional Court in a long-awaited decision in principle. On the other hand, the judges do not find it necessary to distinguish between the contributions to pension and health insurance. The applicants are disappointed (Az .: 1 BvR 2824/17).

Family groups have been calling for a reform of social security for decades. People raising children should be relieved because they currently contribute twice to the insurance: on the one hand through their monthly financial contribution, on the other hand through the “generative contribution” by raising future contributors.

In a decision that was sensational at the time, the Federal Constitutional Court in 2001 fundamentally recognized this argument. Since then, those without children have had to pay a somewhat higher contribution to long-term care insurance than those insured with children. The childless benefit is currently 0.35 percentage points. Karlsruhe had at that time obliged the legislature to conduct a study for pension and health insurance, but they saw no reason for differentiation.

Since then, the Catholic Family Association (FDK) has organized lawsuits that primarily aim to improve families’ contributions to pensions and health insurance, because the amounts involved are significantly higher. For example, the contributions to the pension insurance make up 18.6 per cent of the gross salary, to the health insurance 14.6 per cent and to the long-term care insurance only 3.05 per cent (childless: 3.4 per cent). The plaintiffs have, in principle, wanted to achieve that a subsistence minimum is exempt from paying social security contributions – as in the tax legislation.

On Wednesday, the federal constitutional court published a decision on three exemplary constitutional appeals and a statement from Freiburg’s social court, which mainly goes back to the FDK campaign. Three families from southern Baden, who have been complaining through the authorities for 16 years, were involved.

The lawsuits were only successful in terms of long-term care insurance. Unlike in 2001, the judges called not only for a differentiation between families and those without children, but also within families. The judges first emphasized that families bear extra burdens by having more expenses and often also less income, especially if one parent completely or partially abandons paid work. However, the costs are significantly higher for families with two or more children than for families with just one child.

If all parents are treated equally when it comes to social security contributions, according to the judges, it is contrary to the principle of equality in the Constitution. According to the 2019 micro-census, 50.7 percent of families with minor children have only one child. The other half of the families have two children (27.4 percent), three children (9.2 percent), four children (2.1 percent), or five or more children (0.6 percent).

In the case of pension insurance, on the other hand, a differentiation of the contributions is not necessary, according to the court, because different educational results are already taken into account here. For example, there are pension points per. child in the first three years of a child’s life. Parents therefore receive the same pension level as childless people with fewer financial contributions. Even with health insurance, judges do not consider differentiation necessary. Finally, families also have an advantage over benefits because children are also insured for free.

The legislature must now change the contribution structure for long-term care insurance. How he does that is largely up to him, he has great creative freedom, the court emphasizes. The legislature can raise or lower the contribution rates. He could also support the new regulation with taxpayers’ money to avoid an increase in contributions. The legislature could even limit the differentiation to the actual period of upbringing (while it is currently still valid for life). In any case, the new regulation must apply from 1 August 2023. According to the judges, the turnaround was too expensive for the past.

The differences for the insured will remain moderate. For example, in a sample calculation, the federal government found that the average income would pay nearly five euros less per month for long-term care insurance for each additional child. The following rates were provided: a supplement of 0.3 percentage points for those without children, a supplement of 0.15 percentage points for parents with one child, the normal contribution for families with two children and a contribution discount of 0.15 percentage points for each additional child.

The German family association, which was also involved in the lawsuit campaign, stressed: “We now have clarity that family-friendly social contributions can only be achieved through political channels.” The Family Association of Catholics declared: “The introduction of a child allowance in all branches of social security is still an important goal of family associations.”

However, plaintiff Stephan Schwr considers that the chances of achieving this goal are minimal. “Nothing political will happen anymore. All politicians will say, ‘After all, the Federal Constitutional Court decided the case,'” Schwr said. He is bitterly disappointed that the Constitutional Court sees no need for action in the field of pension and health insurance. The court thus moves away from its decision of 2001. Schwr’s conclusion: “It is a disastrous result for us.”

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