Study Shows More American Families Benefiting from Long-Term Care Insurance

Affordable Long-Term Care Insurance paid American families $12.3 Billion in benefits in 2021 alone, helping many people receive care at home. The consequences of long-term health care affect families and finances. Preparing for longevity is vital for a successful future retirement.

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Study Shows More American Families Benefiting from Long-Term Care Insurance
5 Min Read January 18th, 2020 Updated:March 3rd, 2022

More people than ever before are using the benefits from their Long-term Care Insurance policy. The latest data from the American Association for Long-Term Care Insurance (AALTCI) shows that claims from Long-Term Care Insurance policies have increased by 35% in the past five years. The claims data show continued evidence that Long-Term Care Insurance is helping American families prepare for the financial costs and burdens of aging.

Long-Term Care Insurance pays for extended care that a person may require due to an illness, accident, or the impact of aging. Generally, this is custodial in nature, meaning help with everyday living activities or supervision due to cognitive impairment. 

Long-term health care costs are increasing rapidly due to increasing demand and higher labor costs. Quality care is expensive and often drains a family’s savings. 

Family caregivers find the job demanding, and the burdens placed on them and their families change their lives forever. These family caregivers face tremendous pressure and anxiety when they find themselves in the role of being a caregiver for an older parent. Most of the time, they are unprepared and untrained for this role.

“The number of individuals who received benefit payments has grown as policyholders age.  Long-Term Care Insurance is something you buy generally in your 50s and 60s, fully expecting that if you live a long life, you’ll need care one day. Insurers understand and expect this as well.” 

 Jesse Slome, director of the AALTCI. The AALTCI is a national consumer education and advocacy group.

Billions of Dollars Benefiting American Families

The growth of claims in the past five years is substantial. In 2015 the major insurance companies paid $8.14 Billion in benefits. In 2021 the total was $12.3 Billion in benefits paid to American families in Long-Term Care Insurance benefits.

“In 2019, the long-term care insurance companies paid out $11 billion in claim benefits to some 310,000 individuals. That represents a 35.11 percent increase over the $8.14 billion paid out five years earlier in 2015.”

Jesse Slome

According to the AALTCI, 7.5 million Americans have some form of Long-Term Care Insurance as of January 1, 2020. These numbers include traditional policies as well as asset-based policies. California, Texas, and New York lead the nation with the total number of policyholders. 

Ideal Time to Plan for Long-Term Care is When You are Younger

About 76% of purchasers of Long-Term Care Insurance are aged 50 through 69, according to AALTCI data. Premiums are based, in part, on your age at application, health, family history, and the total amount of benefits you wish to purchase.

People often wait until they face health events to think about planning for long-term health care. Twenty-one percent of applications for Long-Term Care Insurance are rejected for those in their 50s. This percentage increases with age. Forty-four percent of applicants get declined from ages 70 to 74. Experts indicate that the best time to plan for the financial costs and burdens of aging is when you are younger and healthier. 

Despite tax incentives and today's emphasis on retirement planning, too many people fail to plan. Failure to plan puts full responsibility for future care on your family or finances. Often both. 

"I think public awareness despite Long-Term Care Awareness Month, Alzheimer's Awareness Month, National Family Caregivers Month, is lagging. Working caregivers are impacting employers and employees in significant ways."  

Noel Evans, a Washington D.C. based Long-Term Care specialist.

Long-Term Care Impacts Family and Finances

The impact on family members is one of the biggest reasons people purchase Long-Term Care Insurance. There is a tremendous physical, emotional, and financial burden that family members face when they become a caregiver for a parent.

"We need to make it easier for people to get Long-Term Care Insurance. We need to make it easier for them to pay for their premiums." 

former presidential candidate Sen. Amy Klobuchar (D-MN)

Klobuchar had called for tax credits for family caregivers, better wages for professional caregivers, as well as tax incentives for Long-Term Care Insurance. These ideas have been embraced on a bipartisan basis. 

The Trump administration had also looked at various ways to add tax incentives for Long-Term Care Insurance. President Joe Biden also supports additional tax benefits for Long-Term Care Insurance, but no plan has been announced.

Many American families face the problem of long-term care, and the numbers continue to grow. A 2019 study by the AARP Public Policy Institute says 41 million Americans are providing care services to an elderly family member without pay. An estimated 16 hours a week of work on top of their own jobs and families, placing strain on these caregivers.

Policies Pay for Care at Home. Many Options Available

Long-Term Care Insurance provides the resources to pay for quality care either at home or at a facility. With benefits from a policy, this gives the family the extra time to be family. 

There are many different options available when considering Long-Term Care Insurance. If a person purchases a policy in their 40s or 50s, they can enjoy lower premiums and even qualify for preferred health discounts.

 You can start your research with some of the tools available on LTC NEWS. One of the tools includes The Ultimate Long-Term Care Guide, which you can read by clicking here

Most states offer Partnership Long-Term Care Insurance policies that provide dollar-for-dollar asset protection. These policies provide additional financial peace of mind. See if your state offers these policies by clicking here.

Experts suggest seeking the help of a qualified Long-Term Care Insurance specialist. Be sure they work with the major insurance companies, fully understand underwriting requirements, policy design claims, and know the difference between traditional, partnership, and asset-based plans. Find a specialist by clicking here

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

People need long-term care services due to an illness, accident, or the impact of aging. Health insurance and Medicare (including supplements) will not pay for most of these costs.

Family caregivers find it hard to juggle their careers and family responsibilities with that of a caregiver for an older parent. The burden is something most people have said in surveys that they don't want to place on their family.

The solution is affordable Long-Term Care Insurance. LTC Insurance provides guaranteed tax-free benefits to access your choice of quality care options, including care at home. You will protect your income and assets and reduce the stress and anxiety otherwise placed on loved ones.

Planning Tools and Resources on LTC NEWS

You can find many tools and resources on LTC NEWS to assist you in your research for a planning solution or help your family find the appropriate care for a loved one at the time of crisis. 

To help you plan the costs and burdens of changing health and aging, LTC NEWS has put in place several resources, including:

Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.

Seek Professional Guidance

Insurance rates are regulated, so no insurance agent, agency, or financial advisor can give you special deals. However, insurance companies' premiums vary over 100% for the same coverage.

Experts suggest using a qualified Long-Term Care Insurance specialist to help you navigate the many options available to you and your family.

A specialist who works with the top companies can match your age, health, family history, and other factors and find you the best coverage at the best value. A specialist will save you money, and you will have peace of mind knowing they are making the appropriate recommendations - Work With a Specialist | LTC News.

Finding Quality Care for Mom or Dad

Start by reading our four guides -  

If they are lucky enough to own a Long-Term Care Insurance policy, be sure they use it. Sometimes families wait, thinking they can save the benefits for a rainy day. Waiting on using available Long-Term Care Insurance benefits is not a wise idea. 

Get Help in Filing a Long-Term Care Insurance Claim

Quality care obtained early will help provide a better quality of life and reduce the risk of a deep decline and facility care. If you need help in starting the process of a Long-Term Care Insurance claim, LTC NEWS can help.

LTC NEWS provides free assistance with no obligation to help you or a loved one complete the claims process with a Long-Term Care Insurance policy. We have teamed up with Amada Senior Care, who will do all the work, free with no obligation. 

You can also get support in finding quality caregivers and get recommendations for a proper care plan, whether a person has a policy or not. - Filing a Long-Term Care Insurance Claim | LTC News

Benefits of Reverse Mortgages 

Today's reverse mortgages for those aged 62 and older could be an ideal resource to fund a Long-Term Care Insurance policy OR even provide money to pay for care if you, or a loved one, already needs help and assistance.  

Some people have much of their savings invested in their homes. With today's reverse mortgages, you can find ways to fund care solutions, care itself, even help with cash flow during your retirement. 

Learn more by asking questions to an expert. LTC NEWS columnist and host of the TV Show "62 Who Knew" will answer your questions regarding caregiving, aging, health, retirement planning, long-term care, and reverse mortgages. 

- Just "Ask Mike." - Reverse Mortgages | LTC News.

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