Long term Care Insurance has gotten much more expensive throughout the years. Fewer and fewer seniors are able to pay the amount needed to have good long term care insurance. According to Fortune, 55% of people over 50 years old decided not to purchase coverage due to its costly price. It has become a rarity for seniors to have it when they need. Only 1% of people over 75 years old buy LTC insurance. The average age of buying the insurance is 55 years old because if one waits until the are 75, the premiums are high AND most people by this time have developed health issue making them uninsurable. Long term care insurance has become more of a concern for the middle income. The lower income most often cannot afford LTC and usually qualifies for Medicaid or Medicare. Meanwhile, the upper income can usually afford to pay for their nursing care expenses themselves.
Why has Long Term Care Insurance gotten so Expensive?
Long term Care Insurance has gotten so expensive because more and more people are wanting to receive in-house assistance as well as facility living such as nursing homes. According to a study done by Life Plans, in 1990, 63% of people bought policies that only covered Nursing homes and 37% of people bought policies that covered both nursing homes and home care. In 2015, only 1% of people bought policies that only covered nursing homes, 3% bought policies for only home care, and 96% bought policies that covered both nursing homes and home care.
Rather than investing in LTC at a younger age to save money, people wait because they did not need it at the time, which makes the price increase significantly. Two-thirds of recent buyers said the only reason they chose to purchase the product was because they were concerned about how much higher the price would be in the future if they waited. Only 0.8% of people under the age of 35 have applied for LTC.
What is preventing people from buying Long Term Care Insurance?
Many of non-buyers claim they would be more likely to purchase LTC if the government would allow them deduct premiums from their taxes and if the premiums would stay the same price over time rather than get more expensive. In 2010, 31% of people agreed with the following statement: when they are older and need help with paying for assisted living or nursing-home care, the government will pay most of the costs. In most cases, they are wrong. The government sets a very strict list of financial and non-financial qualifications for everyone that applies to Medicaid. Which makes it very difficult to receive coverage. The qualifications that exclude many people from being covered include, financial eligibility, citizenship status, age, pregnancy, as well as parenting status.
Is there a solution to these rising costs?
Yes, there are Life/Long Term Care hybrid plans that have been developed that guarantee the premium AND will refund all premiums paid with interest tax free if care is never needed. They do require an upfront payment on average of about $100,000 per person.
Another possible solution would be for the government to offer tax deductibility of the premiums. According to Fortune, “Nearly one-third of non-buyers said they would be more likely to buy insurance if they had a guarantee that the government would continue to pay for their care when their benefits were exhausted.”
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