The German population is getting older and older. This means that more and more people need to be cared for as they age. But in many cases, the pension or assets are not sufficient in the long term to cover the costs of care. Who then has to pay the costs?
If you lose strength as you get older or if age-related illnesses such as dementia no longer allow you to live independently, you need to find a place to care for yourself – either with an outpatient care service or in an inpatient nursing home.
But the care costs can quickly run into the thousands each month. According to a study by the Association of Replacement Funds eV (vdek), the personal contribution of a cared-for person in inpatient care was an average of 2,248 euros per month in July 2022. Even those who have saved a lot in life or receive a sizable pension quickly find themselves in the situation where they cannot afford these costs themselves in the long term. In such a case, do the children have to pay for parental support? An overview.
What costs does a person in need of care have to cover themselves?
The basic rule is: Anyone who needs care must first pay for it themselves, explains Silke Lachenmaier, consultant in the health and care department of the Rhineland-Palatinate Consumer Center. “Before you look at the children, it is important to check what resources the parents themselves have to spend,” explains Lachenmaier in an interview with star.
Although some costs can be covered by statutory nursing care insurance, in most cases the monthly costs significantly exceed the insurance subsidies. Accordingly, many people in need of care have to pay the outstanding amounts “out of their own pocket”. To do this, monthly income is first used. These are usually pension payments and any additional income, for example from rentals or similar. If these amounts are not enough, those in need of care must cover further costs from their assets.
Do those in need of care have to use all of their assets to cover their care costs?
Here Lachenmaier clears up a misunderstanding: “It’s a misconception that you have to use everything up.” Those in need of care are entitled, among other things, to so-called protective assets of 5,000 euros. This should under no circumstances be touched, warns Lachenmaier – not even in order to advance costs: “If the savings assets are used up, the social welfare agency will not replenish them.”
However, apart from the savings assets, those in need of care must use their entire assets to pay care costs. This also includes houses or apartments. If a single person in need of care has to move from their own property into a nursing home and this property is empty, it must be sold, explains Lachenmaier: “This is usable assets that must also be used for the care costs.”
Theoretically, it is also possible to rent the property, according to the advisor from the Rhineland-Palatinate consumer advice center. But this is only permissible if the rental income fully covers the outstanding care costs. With current care costs between 2,000 and 3,000 euros per month, this is very rarely the case, says Lachenmaier.
Who has to step in when the assets of those in need of care have been used up?
Of course, having a large fortune or a property that can be sold and used for care costs is not the norm. So who has to pay the costs if the assets of a person in need of care are used up? The basic rule here is: If a person in need of care is unable to pay their care costs, there are two possible parties who can step in: their own children or the social welfare office.
Many children are understandably afraid of having to pay for their parents’ care costs and becoming impoverished themselves. However, this fear is unfounded, explains Lachenmaier: “For children of those in need of care, the situation has eased since 2020 thanks to the Relatives’ Relief Act. They are only obliged to pay maintenance if their annual gross income is over 100,000 euros.” There are no exceptions to this rule. In such a case, the children’s assets are also completely irrelevant, explains Lachenmaier: “The only thing that is taken into account is their income. If this is below 100,000 euros, then the assets do not play a role. It could be that you have saved several hundred thousand euros in assets but your annual gross income is below this threshold. Then you are not obliged to pay maintenance.”
However, the situation is different for children who earn more than 100,000 euros. In principle, these are initially subject to maintenance.
How much do higher earners have to pay for parental care?
According to Lachenmaier, it is not possible to specify the extent to which people with an income of over 100,000 euros have to contribute to their parents’ care costs. In such a case, she recommends consulting with a lawyer to calculate the actual burden. By law, a child subject to maintenance is entitled to a so-called “self-support” amounting to 2,000 euros net as a single person or 3,600 euros net as a married couple. However, that doesn’t mean that anything beyond that goes toward the cost of care.
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In order to determine the actual burden, the adjusted net income is first calculated – i.e. the income after deduction of taxes and social security, contributions to pension schemes, interest and loan servicing, insurance and all other expenses of daily life. All of these positions can be stated as “reducing income.” The principle applies here: parental support must not jeopardize your own livelihood.
Of the income that is left over after deducting all of your own costs and self-support, half must be spent on the care costs of your parents.
But there are special cases here too: If, despite the child’s high income, the child’s monthly burdens are so high that parental support cannot be paid, it may be examined whether the child’s assets could be used to pay this, says Lachenmaier. “But here too, protective assets must be taken into account.”
How is the contribution to the care costs divided among several children?
If a person in need of care has several children, attention will first be paid to how many children exceed the income limit of 100,000 euros. Children who are below the limit do not have to pay parental support. If a child is above the limit but his or her siblings are not, this child alone is liable for maintenance. If several children are over the limit of 100,000 euros, the parental support will be divided among them.
What counts as “income” anyway?
“In principle, everything that is considered income according to income tax law,” explains Lachenmaier. This logically includes salaries, income from rental or leasing, as well as income from capital contributions such as dividends from stock transactions. The deposits in stocks or funds themselves, on the other hand, count as assets.
Are there loopholes to “save” your own or your parents’ assets?
If the parents’ assets have been used up and none of the children earn more than 100,000 euros, the social welfare office will cover further care costs – no matter how large the children’s assets are at the time. It makes sense to think that before the care costs put a strain on the parents’ assets, they should quickly give it away to the children and let the social welfare office bear the costs. But it’s not that easy to avoid paying your own share of the care costs, explains Lachenmaier: “The whole thing has a time component. Of course I can give money away to my children, but these gifts have to be more than ten years ago in order not to be reclaimed by the social welfare office .”
This is a civil law claim – to put it simply: All gifts made in the past ten years, especially monetary gifts, can be reclaimed by the social welfare office. Exceptions to this are so-called “modesty gifts”, i.e. smaller donations, for example on birthdays. The social welfare office has the right to view the bank statements for the past ten years, said Lachenmaier.
The situation is similar with real estate. Many parents would have their house or apartment transferred to their children at an early stage and would be guaranteed lifelong right of residence. But here too, the ten-year deadline must be observed in order to be legally on the safe side. Otherwise, the social welfare office could definitely reclaim the property as an asset or demand compensation to cover the care costs, explains Lachenmaier.
What exceptions are there?
In principle, all children – provided their gross annual income is over 100,000 euros – are obliged to pay parental support. This also applies if contact between parents and children is broken off early.
But there are certain situations in which children can be exempt from this payment. These include, for example, long-standing addictive behavior on the part of the parent, neglect of the child or cases of violence and/or abuse.
But the evidence is problematic in this question, explains Lachenmaier: “A statement of facts is not sufficient. You have to prove this accusation through written documents, documents or witnesses.” This is exactly what makes it difficult in many cases to prove neglect or violence in the parental home.
In the case of adopted children, the social parents take the place of the biological parents. Accordingly, the child must pay maintenance, if at all, for the adoptive parents, but not for its biological parents.