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Study: More insurance options can improve long-term services and supports

November 17, 2015
by Nicole Stempak, Associate Editor
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A public/private solution is needed to help aging people plan for and meet their long-term services and supports (LTSS) needs, according to a new report.

Results from a modeling study by the Urban Institute and Milliman, Inc. were announced today to a packed crowd at the National Press Club in Washington. The study explored the amount of long-term help people need with routine activities tasks like walking, eating and getting out of bed. It was funded by LeadingAge, The SCAN Foundation and AARP.

“We are excited and optimistic about what the results from this study reveal: there are options that can help the family pocketbook, help the taxpayer, and relieve the Medicare financial burden,” said LeadingAge President and CEO Larry Minnix. “The bad news is that our aging society will have problems they don’t know they will encounter. But the good news is that there are solutions to help people plan better and relieve financial pressure.”

Urban and Milliman, Inc. modeled several insurance options to demonstrate how new policies might shape the impact of LTSS costs on families and Medicaid. The authors found “no ideal solution” after comparing alternatives to each other and the current situation. They did, however find important differences among the alternatives they hope can help ground future discussions.

Key takeaways about the financial impact of paying for LTSS:

  • The average amount a woman can expect to pay in LTSS as she ages is $182,000. The average amount for a man is $91,000.
  • Fifty-two percent of Americans who reach age 65 will someday need a high amount of help with everyday activities.
  • Families spend more than $100 billion annually to cover about half of paid care directly.

America’s aging population faces an unprecedented number of chronic conditions such as Alzheimer’s disease, Parkinson’s disease, heard disease and diabetes. Those conditions come with unprecedented costs.

Medicaid covers these services for Americans with certain disabilities and limited incomes and assets. The number of middle-class Americans purchasing private long-term care insurance declined in the past decade. Policymakers believe more Americans would purchase insurance if the plans changed and costs reduced.

Read the Web first report here.



Ironically, the study states that "relatively few people purchase private long-term care insurance because of high premiums." Yet for all age groups the premiums proposed in this study would cost, on average, 64% more than long-term care insurance costs today. This program would not decrease premiums but dramatically increase them!

Fortunately, 43 states in cooperation with the federal government have already launched an affordable solution: a "Public/Private" Partnership for Long-Term Care. To help the middle-class plan for long-term care these states have approved for purchase a special type of insurance called "Long-Term Care Partnership Policies".

A Long-Term Care Partnership Policy can protect most, if not all, of your assets from Medicaid spend-down and Medicaid estate-recovery. For example, a married couple both age 61, in average health, could share a Long-Term Care Partnership Policy with $250,000 of benefits. Their premium would be less than $100 per month per spouse. If they used all $250,000 in the policy, they could apply for Medicaid benefits and protect $250,000 of their savings from Medicaid.

If the couple wants to protect more savings they can buy more benefits for a higher premium. If the couple has less savings they can buy less benefits for a lower premium.

You can target how much coverage you need based upon how much of your savings you want to protect from Medicaid. In everyone’s case, a lifetime of savings and hard work can be protected through these Long-Term Care Partnership Programs.

Clearly, the Long-Term Care Partnership Programs are the most equitable solution to the long-term care crisis facing our nation. The wealthy pay more to protect more assets. The “not-so-wealthy” pay less and can still protect all of their assets.

Here’s a link to more information about these programs:

Scott A. Olson