Care Costs

Definition and legal foundations of care costs

Care costs refer to all financial expenses incurred in connection with the nursing care of a person. They include the costs for home and inpatient care services as well as for care, support, accommodation, and meals within the framework of the need for care. Care costs are a central concept in social and insurance law and play a significant role particularly in connection with statutory and private long-term care insurance, welfare regulations, and maintenance law.

Legal definition and distinction

In legal terms, care costs can be defined as all necessary expenses arising from a person’s need for assistance to support daily living activities. This encompasses both basic care services (e.g., personal hygiene, nutrition, mobility), domestic assistance, and care support. Care costs are distinguished from other related types of costs such as medical treatment costs (for example, costs for medical treatment or rehabilitation).

Statutory basis in Germany

The regulations concerning care costs can be found in various legal sources, namely:

• Eleventh Book of the Social Code (SGB XI): Regulations on social care insurance
• Twelfth Book of the Social Code (SGB XII): Regulations on assistance for care within the framework of social welfare
• German Civil Code (BGB): Regulations on maintenance, including care costs
• Insurance Contract Act (VVG): Provisions on private nursing care insurance

Long-term care insurance and care costs

Statutory long-term care insurance (SGB XI)

With the Care Insurance Act (SGB XI), statutory long-term care insurance was established as an independent branch of social insurance. The aim is to provide financial security for care needs. In cases of care dependency, the long-term care insurance provides cash or in-kind benefits to cover care costs.

Scope of benefits

Statutory long-term care insurance distinguishes, in the reimbursement of care costs, especially between:

• Care allowance: For self-procured care services, e.g., care provided by relatives
• Care services in kind: For utilization of professional caregivers
• Combined benefits: Combination of in-kind and cash benefits
• Inpatient care services: Subsidies for the costs of full inpatient care

The level of cost coverage depends on the degree of care (levels 1-5) of the affected person. However, the long-term care funds only provide a fixed lump-sum contribution; actual care costs may exceed this amount (“partial coverage principle”).

Private long-term care insurance

Persons who have private health insurance are required to take out private compulsory long-term care insurance. The entitlements to benefits are determined in type and extent according to the provisions of SGB XI, but may vary in detail. Private long-term care insurance reimburses the care costs agreed in the insurance contract, but usually also as lump-sum benefits.

Care costs and social assistance (SGB XII)

If personal income and the benefits from long-term care insurance are insufficient to cover care costs, entitlement to long-term care assistance under SGB XII may exist within the framework of social assistance. Social assistance generally covers uncovered necessary care costs but takes into account the income and assets of the person in need of care as well as their maintenance obligors (§ 61 ff. SGB XII).

Maintenance law relevance of care costs

Claims against relatives

According to the provisions of the German Civil Code (BGB), relatives in a direct line (especially children towards their parents) are obliged under certain conditions to bear the costs of care if their own income and assets as well as state benefits are insufficient (§ 1601 ff. BGB). Within the framework of so-called parental maintenance, children may, under certain circumstances, be required to pay care costs for their dependent parents.

Recourse to spouses and children

Within the framework of social assistance, the social assistance provider may seek recourse from spouses or children with a maintenance obligation. Recourse to maintenance is taken strictly with consideration of certain asset protection limits and income exemptions, which are regularly specified by case law and administrative practice.

Types and scope of care costs

Distinction by type of benefit

Care costs can be differentiated according to the type of services utilized:

• Outpatient care costs: Costs for services in one’s own home, including assistance from outpatient nursing services or everyday support staff
• Inpatient care costs: Costs incurred through care in a facility (nursing home), including investment costs, accommodation, and meals
• Short-term and respite care: Temporary care in the event of absence of the caregiver or to bridge crisis situations
• Semi-inpatient care: Day or night care in a facility
• Care aids and home adaptation measures: Costs for aids (e.g., nursing beds) or modifications (e.g., conversion of the bathroom for accessibility)

Extent and personal contribution

The actual level of care costs depends on individual needs, the care level or degree, and the agreed extent of care services. In practice, actual care costs often exceed the benefits provided by long-term care insurance, resulting in a personal contribution that must be covered by the person in need of care, their relatives, or the social assistance provider.

Care costs in tax law

Expenses for the care of a person in need of care can be claimed for tax purposes under certain conditions. These include:

• Extraordinary burdens (§ 33 EStG): Care costs that are incurred unavoidably by the taxpayer
• Tax allowance for caregivers (§ 33b para. 6 EStG)

Particularly eligible are personal contributions not reimbursed by the long-term care insurance.

Seizability and ranking of care costs

In compulsory enforcement proceedings, care costs are treated as a preferentially seizable claim if they serve to secure the minimum subsistence level. In insolvency proceedings, care costs are given preferential treatment to maintain necessary care and support.

International aspects

Coverage or reimbursement of care costs in a cross-border context is governed by European law and, where applicable, bilateral agreements. In particular, the right to take care services to other EU countries is restricted under SGB XI, but there are certain exemptions for short-term stays abroad or for residence in EU/EEA member states.

Overview of the most important case law

Several rulings by the Federal Social Court, the Federal Court of Justice (BGH), and financial courts specify the interpretation and handling of care costs in individual cases, particularly regarding:

• Reasonableness of personal contribution
• Appropriateness of care costs
• Recourse to relatives
• Tax deductibility
• Contract structuring with care services and nursing homes

Summary

Care costs constitute a central concept in social, family, and tax law, and encompass all expenses incurred for the provision of nursing care. Reimbursement and coverage are provided as appropriate by statutory or private insurance, social welfare providers, or maintenance-obligated relatives. The legal situation is complex and subject to ongoing development by legislation and case law. A careful examination of individual entitlements and financing options is always necessary in the area of care costs.

Frequently asked questions

From a legal perspective, who is generally obliged to cover care costs?

In Germany, care costs are generally initially borne by the person in need of care themselves. If their income and assets are insufficient, the statutory long-term care insurance acts as a partial payer since it does not provide full coverage, but only covers a fixed share. If, despite the benefits from the long-term care insurance, there remains a financial gap such that care cannot be sufficiently financed, there is the possibility to apply for “assistance for care” from the social welfare provider under SGB XII. If, after including the long-term care insurance and the person’s own means, the need is still not met, the social welfare office is legally obliged to cover the remaining care costs as part of social assistance. However, the social welfare office then proceeds to examine so-called maintenance obligations of family members. Since the Angehörigen-Entlastungsgesetz (Relatives Relief Act), this means that children of persons in need of care are only required to pay maintenance if they have a gross annual income of more than 100,000 euros.

What counts as legally eligible care costs?

In legal terms, care costs are deemed to include all costs that directly serve care and support. These specifically include expenses for outpatient, semi-inpatient, and inpatient care facilities, costs for approved care services as well as care and relief services under §§ 36 ff. SGB XI. Eligible costs also include residential accommodation, expenses for room and board (so-called hotel costs), and investment costs of nursing homes, as long as these are not otherwise covered. Costs for services that do not directly serve care are not recognized, e.g., hairdressing, cosmetic treatments, or individual additional services beyond the contractually agreed care services. The exact distinction is regularly determined by legal requirements and contractual arrangements.

How are income and assets to be used assessed legally when covering care costs?

According to the provisions of social law, especially §§ 85 ff. SGB XII, the person in need of care must generally use all their available income and assets to cover care costs before state assistance is provided. This includes pensions, rental and lease income, and other earnings. However, certain exemptions, e.g., for necessary everyday expenses, are legally guaranteed from this income. There are also so-called asset protection limits (e.g., a basic exemption of 10,000 euros for single persons) that may not be touched. Under narrow conditions, protected assets can include small cash amounts, reasonable household effects, and an occupied owner-occupied apartment that is not unreasonably large. For property in particular: The self-used property can remain protected under certain circumstances if the partner or other eligible relatives continue living there.

To what extent are children legally obliged to assume care costs in the context of parental maintenance?

Children can be called upon to cover care costs for their parents under statutory maintenance obligations pursuant to §§ 1601 ff. BGB. Since the implementation of the Angehörigen-Entlastungsgesetz in 2020, children are only required to pay if their gross annual income exceeds 100,000 euros. If income is below this threshold, liability is excluded under § 94 paragraph 1a SGB XII. Even if this threshold is exceeded, only the financial resources above the so-called self-retention are considered. The self-retention takes into account living expenses, to some extent provisions for retirement, and maintenance obligations towards one’s own children and spouse. To determine the exact share of liability, the social welfare office examines the individual’s ability to pay very carefully.

What statutory deadlines and procedures apply when applying for and approving care cost coverage by the social welfare office?

For applications for the coverage of uncovered care costs, SGB XII does not specify any fixed deadlines, but the social welfare law principle of covering needs applies: Benefits are granted with effect from the date of application and, under certain circumstances, retroactively. Applicants must provide comprehensive information regarding income, assets, and family circumstances. The social welfare office then reviews the documents, may request further evidence, and will hear the parties involved—especially when reviewing the maintenance obligations of third parties. The processing time varies according to the complexity of the case and subsequent examinations but, according to § 14 SGB IX (clarification of responsibilities), should generally be completed within three weeks; any delay must be justified and accompanied by an interim notice. After final review, a written decision is issued, against which an objection can be lodged within one month.

Under what conditions can care home operators or care services legally claim outstanding care costs?

Care services and care home operators usually conclude civil law contracts with the person in need of care or their legal guardians. If the agreed remuneration is not paid wholly or in part, outstanding care costs can be claimed by means of a civil law claim—including reminder, legal action, and, if necessary, compulsory enforcement. The decisive factor is that a valid, written care contract exists. If care services are billed to statutory or private care insurance funds, a legal review is carried out in case of benefit denial (objection, legal action before the social court). For private-paying clients, care home operators must specifically prove their services and the payment claim in the event of a dispute (invoicing, proof of service). If third parties (e.g., relatives after a guarantee) are included in the contract, they can potentially be held liable.

For which care costs is there a right to state coverage by social assistance despite existing real estate assets?

Although the principles of SGB XII generally require that real estate assets be used to finance care costs, there are exceptions to this. The occupied property (“family home”) can remain protected as an asset for the person in need of care or their spouse/life partner under certain conditions, as long as they themselves or maintenance-eligible relatives live in it (§ 90 para. 2 no. 8 SGB XII). Sale or utilization of the property need not be demanded if this would cause undue hardship for the owner or other residents. Should it nevertheless come to realization, the social welfare office reviews whether (part of) the proceeds can be used as a personal contribution to care costs. In every case, individual case reviews are necessary, and it is recommended to seek legal or expert advice at an early stage.