In light of current demographic trends with growing numbers of dependent persons in need for long-term care (LTC), providing sustainable LTC arrangements becomes an increasingly important issue. According to the German LTC social insurance that has been implemented in Germany in 1994, formal homecare services are in the main focus of alternative LTC arrangements. Such homecare services are to complement informal family help in order to improve the quality of care services and to stop the market share of nursing homes from increasing. However, under current institutional conditions of the German LTC insurance scheme, homecare services cannot fully live up to these expectations. In particular, allocating in-kind payments to the client for predefined sets of care services leaves little room for homecare services to provide alternative and more client-oriented LTC arrangements. Thus, such an institutional design may be counterproductive to developing high-quality and client-oriented LTC arrangements. Moreover, it may also curtail employment creation in this service sector. Therefore, the main focus of this research project is on the institutional conditions under which the homecare sector provides its services. The idea is to identify the restraints the homecare sector faces under the current LTC insurance scheme. In particular, there will be a focus on alternative financing and organising principles that have already been implemented in other countries with LTC insurance schemes. One such alternative financing scheme is the client-allocated personal budget instead of in-kind transfers to the person in need of LTC.