Employer Action Code: Monitor
The federal government has approved a draft bill to reform the statutory healthcare system, aimed at limiting further increases in healthcare contributions. Similar to many other developed countries, Germany is facing a rapidly aging population, leading to higher demand for healthcare services. As of 2023, total healthcare spending in Germany equaled 12.3% of GDP, well above the OECD average of 9.3% and higher than any other OECD country except the U.S.
Key details
A guiding principle of the reform is to better align cost and reimbursement growth with wage development. The reform package, approved by the cabinet on April 29, 2026, contains most of the measures that a special commission proposed a month earlier on how to stabilize the finances of the healthcare system, including:
- Partial short-term disability (STD) benefits would be introduced, allowing employees expected to be on sick leave for over four weeks to return to work at 25%, 50% or 75% of their usual working hours. Claims for partial STD leave benefits would be subject physician approval and both employee and employer consent. During partial STD leave, employers would pay for hours worked, while paid sick leave (at the standard 70% of covered pay) would apply for the remainder. Partial STD leave would only be possible after the first six weeks of sick leave that are fully paid by the employer
- The minimum patient copayment for prescription drugs would increase to 7.5 euros (currently €5.0), and the daily fee for hospitalization to €15 (currently €10). Furthermore, copayments would be indexed to the growth of gross earnings. Copayment amounts have not changed since 2004. The ceiling on annual copayments per household would remain equal to 2% of household annual income (1% for the chronically ill)
- Restrictions to free co-insurance for non-working partners would be introduced. Affected employees would be subject to an additional healthcare insurance contribution of 2.5% of covered earnings. Certain exemptions from this new contribution would apply, for instance, for parents with young or disabled children and for individuals receiving state retirement or long-term disability benefits
- The monthly earnings ceiling for contributions to the health funds for statutory healthcare coverage would be raised by €300 (a 5% increase), on top of the usual annual increase based on the change in average gross earnings
- Financing of statutory healthcare for the unemployed, currently a significant financial burden for health funds, would increasingly be assumed by the federal government
Employer implications
The draft law is now with Parliament. Employers should monitor progress of the legislation and review its potential impact. The changes may relieve some cost pressures on the health funds, but at additional costs to employers and employees, while underlying demographic and structural cost pressures are not fundamentally addressed.
