Record-Breaking $14.1 Billion Paid in Long-Term Care Insurance Benefits by Top Insurance Companies in 2023

According to an annual report released by a national consumer education and trade organization, a staggering amount of Long-Term Care Insurance benefits are being paid by the nation's top Long-Term Care Insurance companies. 

The top insurance companies paid an astonishing $14.1 billion in Long-Term Care Insurance benefits during the year 2023, according to research from the American Association for Long-Term Care Insurance (AALTCI).

Many of those benefits are being paid for in-home care, in addition to adult day care centers, assisted living facilities, memory care facilities, and nursing homes. Most LTC Insurance policies pay comprehensive benefits, allowing the policyholder and their family to decide the type of care services they wish once they qualify for benefits. 

Federal and State Regulations

Tax-qualified LTC Insurance adheres to stringent federal guidelines, providing regulated benefit triggers and offering enhanced consumer safeguards and valuable tax advantages. Amidst the escalating costs of care services, these benefits play a pivotal role in safeguarding policyholders' income and assets while alleviating the immense burdens that would otherwise fall upon family members.

Aging in the United States carries significant repercussions for both families and financial well-being. As individuals grow older, they often face increased vulnerability to physical ailments, chronic illnesses, dementia, and frailty.

The demand for long-term care services is steadily increasing, resulting in a sharp escalation in associated costs. Conventional health insurance plans, such as Medicare (along with supplementary coverage), typically do not cover most long-term care expenses. However, Long-Term Care Insurance is a valuable solution, offering coverage for these essential services.

The remarkable $14.1 Billion disbursed to policyholders signifies a consistent year-to-year growth trend in the benefits provided by these policies, according to Jesse Slome, AALTCI's executive director.

Claim benefit payouts for policyholders with traditional Long-Term Care Insurance coverage have grown from 2020 when insurers paid out $11.6 billion. The increase in benefit payouts was expected by the insurers.

Many LTC policies feature inflation benefits, increasing the policyholder's benefits yearly. However, according to the AALTCI, this number represents only a portion of the total benefit payouts, as it does not include linked-benefit 'hybrid' policies that combine long-term care and life insurance or annuities. Nor does it include the many short-term cash indemnity plans that pay benefits for long-term care services.

Data for linked-benefit policies is hard to calculate. First, policies tend to need years before claims are paid to aging policyholders. In addition, there are so many different variations of these policies.

LTC Policies Operate in a Similar Manner

Long-Term Care Insurance is a specialized policy designed to help cover the costs associated with long-term care services, which can include assistance with activities of daily living (ADLs) like bathing, dressing, and toileting (including personal hygiene) or supervision due to dementia. The care can be provided at home or in a facility, including assisted living. Simply put, LTC Insurance provides financial support to pay for quality care when you require care due to aging, chronic illness, disability, or cognitive impairment.

The trigger for benefits is a policyholder's health professional certifies that they need help with at least two of the six ADLs or supervision due to dementia. An LTC policy is custom-designed to pay a monthly or daily benefit, with a "pool of money" that can grow over time with a selected inflation benefit. Some policies pay "unlimited" lifetime benefits. 

Long-Term Care Insurance offers the freedom to decide where and in what manner care is provided, enabling family members to remain family rather than becoming full-time caregivers.

Long-Term Care Insurance benefits are mostly paid to individuals who receive benefits for qualifying care in their own home or in an assisted living facility.

The AALTCI collects and verifies its data by consulting with prominent industry actuaries, incorporating historical average annual growth rates derived from the past decade of year-end reporting data from various companies.

Is Long-Term Care Insurance Affordable?

The question of whether Long-Term Care Insurance is affordable can be complex. First, some individuals may not require LTC Insurance, as Medicaid covers these services for those with limited income and assets. Wealthy individuals often utilize LTC Insurance for its tax advantages and comprehensive services. But what about everyone else? Is Long-Term Care Insurance financially accessible?

The answer is somewhat subjective, but for many, Long-Term Care Insurance presents an affordable means of safeguarding retirement savings and alleviating the burdens placed on their loved ones. Premiums are affected by various factors, such as age, health, family medical history, and the policy's overall benefits. Long-Term Care Insurance policies are custom-designed, and premiums vary dramatically between insurance companies for the same benefits.

• How Much Does Long-Term Care Insurance Cost?

Considering the likelihood of needing long-term health care at some point in life, acquiring a policy before retirement while in good health can be a prudent and cost-effective choice. Nevertheless, Long-Term Care Insurance goes beyond merely safeguarding your financial assets; it's a policy ensuring your loved ones won't have to balance the responsibilities of caregiving or care managers.

Expert Guidance for Your Planning

When it comes to securing coverage, it's essential to seek professional, independent assistance. Independent Long-Term Care Insurance specialists who work with top A-rated carriers can help you find affordable coverage that suits your specific situation. It's important to note that underwriting standards can differ between insurance companies. While you might face challenges getting coverage from one insurer, another may be more accommodating to your needs.

• What is Underwriting In Long-Term Care Insurance?

A specialist will ask you many detailed questions about health, family history, and finances to provide you with accurate quotes from all the top companies so you can make an appropriate decision. 

• Find a Qualified, Independent LTC Insurance Specialist

Most people obtain coverage in their 40s or 50s, although, for those with fair good health, you can find affordable options in your 60s and beyond. If you have a questionable health history or have been declined for Long-Term Care Insurance coverage in the past, you may still be able to find affordable options. An LTC specialist will help you find a policy, including cash indemnity policies, that offers more relaxed underwriting rules. 

• Don't Be Fooled by the Name - New Policy Type Can Be Valuable Answer for Long-Term Care Expenses

The Best LTC Insurance Policy: Having One When You Need It

According to experts, the true value of a Long-Term Care Insurance policy becomes evident when you require its benefits. These policies fulfill their purpose by providing financial support, ensuring access to quality care, and alleviating the burden on your loved ones. While $14.1 billion in benefit payouts is a substantial figure, it is a testament to the growing need for Long-Term Care Insurance as the population ages and more individuals receive the vital assistance these policies offer. 

As long-term care services get more costly, having a plan will help protect your 401(k) and other assets from the future cost of long-term health care.

• LTC NEWS Cost of Care Calculator - Choose Your State

As time passes, these numbers are likely to rise, highlighting the importance of having a Long-Term Care Insurance policy in place when needed.