Digital Procedure in Long-Term Care Insurance: What employers need to know since July 1, 2025

Legal Basis and Practical Implementation

The introduction of the digital procedure for transferring child-related data is based on the Long-Term Care Support and Relief Act which came into effect on July 1, 2023. The legal basis can be found in Sec. 55 of the German Social Code, Book XI (SGB XI). Parents with multiple children are to be relieved through reductions in the contribution rate for long-term care insurance. The number of these reductions depends on the number of children under the age of 25. These reductions are applied only to the employee’s contribution rate; the employer’s share is not reduced.

As of the key date July 1, 2025, the transitional period ended during which employers could still collect and consider child-related data in a simplified manner by requesting it directly from employees. From this point on, participation in the digital procedure is mandatory for all employers who are required to pay contributions.  

The feedback from the data transmitted by the German authorities for the calculation of long-term care insurance contributions includes:

• Number of eligible children (under 25 years of age)
• Parental status
• Periods of validity

What does this mean specifically for employers?

Employers are required to pay the correct long-term care insurance contributions.
There is an obligation to make retroactive corrections if an automatic data transmission determines a higher number of children (Sec. 55 (3b) sentence 3 of the German Social Code, Book XI).

If excessive contributions were paid in the past, these must be refunded retroactively. The refund is processed by the so-called “contribution-paying entity” — which, in the case of employees, is usually the employer.

If employers have waited to take child allowances into account until the introduction of the digital verification procedure on July 1, 2025, and have not yet applied any reductions, reimbursement amounts are generally subject to interest.

In the case of manual reporting by employees, corrections can still only be made starting from the month following the submission of proof.

Employers should therefore ensure that payroll software and HR personnel are up to date, as registration for the new procedure takes place automatically via payroll accounting and the individual tax identification number of the employees.

Where is further action required?

Feedback from the German authorities is only provided for employees who are compulsorily insured under the statutory long-term care insurance scheme — not for those with private long-term care insurance or for special groups such as “mini-jobbers”, working students, interns exempt from social security, or posted workers who are in Germany with an A1 certificate.

The system only recognizes children who are relevant for tax purposes. The following children, for example, may be missing:

• Adopted, step, and foster children
• Children with a different family name
• Children living abroad
• Children who were already of legal age in 2011

For children who are not automatically recorded, manual proof (e.g., birth certificates) must still be obtained. Internal processes for collecting, verifying, and archiving child data should therefore be reviewed and, if necessary, adjusted.

If the system provides data that differs from the originally recorded child data and no new proof is submitted by the employee, employers must deal with their obligation to retroactively correct long-term care insurance contributions. In some cases, however, payroll software may only support corrections for the previous year. In addition, refunds or subsequent payments of long-term care insurance contributions - through the pension allowance - also affect wage tax calculations. The employer is required to record the refunded or subsequently paid contributions - including those relating to previous years - together with the contributions paid in the current year on the wage tax certificate for the current calendar year. Close coordination between HR and payroll departments, as well as with the affected employees and authorities, is therefore recommended in each individual case.

Summary

With the mandatory introduction of the digital procedure for transferring child-related data as of July 1, 2025, the determination of parental status and the number of eligible children in long-term care insurance will be significantly simplified and automated. Employers will generally benefit from more efficient data transmission but must ensure that their payroll processes and employee records are up to date. Retroactive corrections and refunds of long-term care insurance contributions are possible, but require careful coordination and, if necessary, manual proof for children who are not automatically recorded. We are happy to support you with social security and wage tax corrections if needed.