What Is Long-term Care Insurance
Long-term care insurance (LTCI) is one financing option for the various components of long-term care. The earliest long-term care policies were first offered in the 1960s and covered only care in nursing homes. In 2016, the National Association of Insurance Commissioners reported that the long-term care insurance market covers more than 7 million Americans and the LTCI policies provide coverage for long-term care in a variety of setting options such as nursing homes, assisted living, or in the home.
How Is LTCI Offered
Individuals purchase the majority of the policies, but an increasing number of employers are now offering coverage through group purchase plans. The federal government has encouraged the purchase of long-term care policies by offering tax deductions to employers who offer long-term care insurance as a benefit.
Almost all long-term care insurance policies sold today meet federal standards, specified by the Health Insurance Portability and Accountability Act of 1996 for favorable tax treatment. Many states also offer incentives to individuals in the form of income tax deductions for the purchase of tax-qualified long-term care policies. However in recent developments, many long-term care insurers have left the market and those remaining are facing financial difficulties for a variety of reasons. Major net effects include soaring premiums for subscribers, increasing numbers of policy attrition, and consumer reluctance to purchase the insurance in the first place.
What Are the Benefits of LTCI
The benefits of LTCI policies vary across a broad spectrum. The most desirable policies cover services across the continuum of potential long-term care needs, with maximum policy holder flexibility. Specialists counsel buyers to be wary of limitations relative to inflationary factors in the costs of coverage, renewal clauses, limits on payments for various modes of long-term care, requirements for prior hospitalizations for eligibility for home care, cancellation features of policies, and lifetime benefit limits. As with life insurance, the premium cost reflects age and health status at purchase of policy. LTCI companies also use underwriting criteria and may reject applicants or increase premiums for individuals with pre-existing conditions that render them at high risk for future long-term care services.
Insurance industry advocates and other analysts contend that individuals and society will benefit in the future from the proliferation of LTCI. In this view, public dependency, especially on Medicaid, to fund long-term care needs would decrease. Individuals, then would have the ability to access the highest quality of long-term care services without the risk of impoverishment.
1. National Association of Insurance Commissioners & The Center for Insurance Policy and Research. Long-term Care. http://www.naic.org/cipr_topics/topic_long_term_care.htm
2. Ujvari K, AARP Public Policy Institute. Long-term care insurance. 2012 Update. http://www.aarp.org/health/medicare-insurance/info-06-2012/long-term-care-insurance-2012-update.html
3. Ostrov BF. Long-term care insurance: less bang more buck. Kaiser Health News. March 2017, 2016. http://khn.org/longterm-care-insurance-less-bang-more-buck/
4. Merlis M. Financing Long-Term Care in the Twenty-first Century: The Public and Private Roles. Institute for Health Policy Solutions. New York, NY: The Commonwealth Fund 1999:20. http://www.commonwealthfund.org/~/media/files/publications/fund-report/1999/sep/long-term-care-financing-in-the-twenty-first-century-the-public-and-private-roles/merlis343.pdf
