Long Term Care Insurance, which pays for the cost of extended care (generally help with activities of daily living and/or supervision due to memory issues), has only been around since the early 1970’s. Yet, by the third quarter of 2016, it is expected that total claims paid by all insurance companies will reach the $100 Billion mark.
An industry website, LTCFacts.org, reports that total claims for 2015 are expected to exceed 9.3 Billion. A report from the National Association of Insurance Commissioners indicates cumulative claims total will hit that $100 Billion mark by later this year.
People require Long Term Health Care services due to illnesses, accidents or the impact of aging. Health insurance and Medicare (health insurance for those age 65 and older) will not pay for the majority of these costs. This means a vast majority of the expenses are paid out of personal assets.
Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI), a national consumer education and advocacy group, says well over 8 million Americans have purchased Long Term Care Insurance policies and an increased amount of people are now receiving the benefits from these plans.
Some people think of nursing homes when thinking about Long Term Care, but Slome says the majority of care is outside a nursing home.
“Over half of all newly opened claims begin with home care," Slome says.
“Americans are living longer and the consequence is more people needing Long Term Care,” Slome explains.
”Contrary to what most people think, the vast majority of Long Term Care Insurance (claims) pays for care in the home or in assisted living communities, not in skilled nursing homes.”
Just last week, the White House issued a report summarizing the White House Conference on Aging which is hosted by the White House once every decade.
“In spite of the large number of people who will need long-term services and supports and the potential threat to retirement security that the high costs represent, most Americans are unaware of how much this care costs or who routinely pays for such services,“ the White House report states.
The report goes on to say roughly a third of pre-retirees incorrectly assume that health insurance or a government program pays for Long Term Health Care. Medicare generally will pay a very limited amount of skilled care and only if a person is getting better. Most Long Term Health Care is custodial in nature, which is help with activities of daily living or memory supervision. Custodial care is not covered by health insurance or by Medicare. Medicaid, the medical welfare program, will pay for these services only for the poor or those who spend-down assets.
Long Term Care Insurance has become part of retirement planning. Once an afterthought, now people are looking at protecting assets and their 401k’s and IRA’s as part of their retirement planning.
“People underestimate life expectancy,” Slome shares. ”Few adults in their 50’s or 60’s are prepared for the financial consequences of their longevity.”
The AALTCI suggests consumers work with a Long Term Care Specialist who has extensive experience in the amount of clients they have helped and who represents the major companies who offer coverage. To learn more about LTC planning you can visit www.aaltci.org. To find a specialist you can call their office - 818-597-3227.
With the risk of needing extended care high, and policies paying claims, consumers have affordable options to address these concerns.