– Have supplementary nursing care insurance policies served their time as asset protection policies? –
Compulsory long-term care insurance (PPV) as partial coverage
“Help yourself, that’s how God helps you” thought the legislator when he created the JPA – even with “Pflege-Bahr” only a partial cover of up to less than 50% of the nursing costs. This leads regularly to the fact that first the own pension up to a pocket money, then the own fortune up to a selfkept amount of 5.000 € is to be used up – then the social welfare office steps in, and sees how it can demand an alimony from children and other relatives in the recourse way.
Temporary protection through bona fide assets in social welfare law does not protect heirs
For example, a self-used property is part of the bona fide assets – social assistance is then granted as a loan. Finally, the estate is settled – for example, when the heirs realize that the inherited loan debt is likely to cause the estate to be over-indebted. If no executor examines this, the heir can refuse for a limited period of time, or apply for administration of the estate for his own asset protection – alternatively, the estate can be declared insolvent.
Federal government reform plans relieve the burden on children with incomes under 100 TEUR
According to a new draft law, from 2020 onwards only children and parents with an annual gross income of € 100,000 or more will be affected by a maintenance obligation due to care costs that cannot (or can no longer) be borne by themselves (Relatives Relief Act).
Whoever has a higher income may consider whether their own obligation to provide parental maintenance, for example, is limited or has ceased to exist because the person in need of care became needy through moral fault, or the person in need of care neglected their maintenance obligation themselves, or there has been serious misconduct towards them (possibly also towards close relatives), § 1611 BGB.
Supplementary long-term care insurance relieves the burden of social assistance and maintenance obligations
Supplementary long-term care insurance is often taken out with the aim of not burdening the children with social welfare claims. Or to preserve their (small) fortune as an inheritance for the children. There are even product ideas from intermediaries that the children would take out such an insurance policy against the claim for social welfare (for example, as insurance on behalf of a third party). A written needs assessment is advisable.
However, one can make a massive miscalculation here if the medical service commissioned by the health insurance company (MDK) determines that the level of care is too low. Mockers then think that one could sue against it – but with the prospect of not experiencing the end of the trial.
Supplementary nursing care insurance or foundation business?
Some consumer protectionists have already said: “The supplementary nursing care insurance is an insurance for the protection of assets. Those who do not have any assets (and also no surviving dependents with assets) do not need supplementary long-term care insurance.“. This is a mistake if you consider that the usual pocket money is up to a little more than 110 € per month – or even a fraction of it; for example for co-payments for medication, hairdresser, chiropody or death insurance. Unless you’re content to settle for that in the foster-care system.
One can actually secure one’s own assets by establishing a foundation, endowment or other foundation business in good time. Once the protection against seizure has been achieved, the foundation’s services to the founder can be arranged to enrich life with amenities. Finally, instead of life annuities, provision can also be made through material assets and services – a question of perspective in the foundation business.
“Giving with warm hands” – also for asset protection
Often, older people have somehow transferred (or squandered) their assets on their children, only to go into a nursing home and claim social welfare. This can be neatly arranged, for example by transferring money against right of residence (not: right of use) in the children’s house and (only domestic) care obligation, so that it is not a generous gift; provided that a mathematical calculation can prove this and the contract is carefully arranged accordingly.
However, if it is a (possibly mixed or partial) donation, the social welfare institution will demand this back because of impoverishment of the donor – if it was made in the last 10 years, §§ 528 f. BGB. In the event of gross ingratitude, there is no time limit which excludes a claim for repayment. It would be a mistake to believe that the presentee could then simply return the gift – and the case would be closed. As a rule, the necessary precautionary contractual arrangements are overlooked; in such cases, the presentee may experience liquidity problems if he or she is required to pay higher regular cash benefits.
Legislative project for the indirect promotion of the sale of old-age provision products
If you do not have any assets (and no surviving dependents with assets) and consider the usual pocket money from the social welfare agency to be sufficient, you do not need supplementary nursing care insurance.
Supplementary nursing care insurance is then usually unnecessary to achieve the objectives if the asset protection is structured correctly, because only the state is spared social welfare benefits. An idea like the Riester pensions for low-income earners, which are often considered unnecessary, which merely means that the state has to spend less to top up the still inadequate total pension to the minimum guarantee. In this respect, the situation is similar, because for most of them the daily nursing allowance only reduces the social welfare expenditure to a greater or lesser extent, but in the end does not leave more than the pocket money.
In economic terms, the legislator is thus promoting consumption and thus supporting the economy, since most people do not need to make their own provisions for the need for long-term care. It will also make it easier to use insurance brokers and employees, who are declining as a result of demographic change, to sell other retirement provision products.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.cash.online.de (published on 22.10.2019)
www.experten.de (published on 12.12.2019 under the heading: Have supplementary nursing care insurance policies served their time as asset protection policies)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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