Overview

• The draft proposes flat-rate allowances and capped apartment sizes to limit rent subsidies and abolishes the one-year Karenzzeit for costly housing.
• Revised earned-income rules would allow recipients to keep more wages but risk shifting up to 400,000 households from Bürgergeld to Wohngeld and Kinderzuschlag, IAB forecasts show.
• Officials in the Finance Ministry project savings of about €1.5 bn in 2026 under the coalition’s pact to align social benefits and strengthen work incentives.
• Researchers at the Institut der Deutschen Wirtschaft recommend linking Bürgergeld indexation to average inflation forecasts to avoid abrupt freezes or overcompensation.
• Health insurers, burdened by roughly €10 bn annually for Bürgergeld recipients’ care, are pressing the federal government to reimburse those costs.