New York Sees Record Payouts in Long-Term Care Insurance as Aging Population Soars

Long-Term Care Insurance is being used more than ever before across the United States. This increase goes hand in hand with the demographic changes in the country. In New York, the population is aging quickly. With more older people in New York and improvements in medical science, New Yorkers have received a record-breaking amount of Long-Term Care Insurance benefits, almost reaching $1.5 billion in the last year reported.

According to 2023 U.S. Census Bureau data, over half, 54.3%, of the state's residents, roughly 10.8 million people, are now aged 50 or older. This trend is particularly pronounced with seniors, with 3.5 million New Yorkers exceeding 65 years old, constituting 17.6% of the state's population. This figure surpasses the national average of 16.0%.

Comparing current data to 2000 reveals a significant shift. Back then, only 36.8% of New Yorkers were 50 or older. This means the senior population has grown by a substantial 17.5 percentage points in just 23 years.

The Center for an Urban Future (CUF) reinforces this observation. Their 2023 report "Keeping Pace with an Aging New York State" details a staggering 31% increase in the number of New Yorkers aged 65 and over between 2011 and 2021, while the younger population witnessed a 2.6% decline.

Several factors contribute to this trend: the aging Baby Boomer generation reaching retirement, a longer lifespan due to medical advancements, and a decrease in birth rates. This demographic shift has broad implications, with rapidly increasing numbers of New Yorkers needing long-term care services. The increasing demand, labor shortages, and higher labor costs are resulting in skyrocketing costs of long-term care, which is expected to continue in the decades ahead.

Billion Plus in LTC Insurance Paid Last Reporting Year

According to the most recent AHIP Long-Term Care Insurance Coverage report (2021), New York families received $1,497,160,000 in benefits from traditional Long-Term Care Insurance. This financial support helped New York families afford quality long-term care services, such as in-home care. It's important to note that this figure doesn't account for benefits paid from hybrid and other types of long-term care policies.

These numbers would be substantially higher today as national numbers for 2023 reported the top insurance companies paid over $14.1 billion in Long-Term Care Insurance benefits. There seems to be little doubt that LTC Insurance has become a vital part of health services in the U.S. and, of course, in New York.

Since the Long-Term Care Insurance industry began, New Yorkers have benefited from a total of $13,718,233,000 in payouts, which have funded all types of long-term care services (home care, adult day care, assisted living, memory care, and nursing home.)

New York families are experiencing firsthand the advantages of LTC Insurance, which protects their income and assets and guarantees access to their preferred quality care while reducing the stress and burdens that would typically impact New Yorkers and their families.

Costs of Long-Term Care Increase in New York

Given that traditional health insurance and Medicare cover only short-term skilled care, the financial burden of long-term care services on individuals is substantial.

Without the protection of Long-Term Care Insurance, which pays for care in both home and facility settings, New Yorkers would face considerable financial difficulties, not to mention the physical, emotional, and financial burdens that their loved ones would face trying to be caregivers or manage professional care services.

• What is Long-Term Care Insurance? What Does It Cover?

The LTC NEWS Cost of Care Calculator for New York reveals these costs and how they are increasing year after year. The average cost of in-home care in the state (based on a 44-hour week) is $5,483 monthly. Base assisted living costs are similar, but surcharges will increase the cost up to $2000 on top of the base cost. However, nursing home costs in New York average $13,882 per month for a private room.

The New York state average is $5,644 per month, but long-term care costs vary depending on where you live in New York. Compare these median statewide average home care costs to these metro areas in New York:

The cost of long-term care services increases yearly. For example, in 2044, the LTC NEWS Cost of Care Calculator suggests that the average median statewide cost of in-home care will be $9,342 monthly. The increase over the 20 years is 65.52%, or 3.28% each year.

New York LTC Partnership Program

The New York State Long-Term Care Insurance Partnership program offers a unique approach to planning for potential future long-term care needs. Authorized under federal law, the program allows those who hold Partnership LTC Insurance policies to shelter part of their estate based on the total amount of benefits paid by the policy and still qualify for Medicaid. Here's a breakdown of the program's features:

• Partnership with Private Insurance: This program combines private Long-Term Care Insurance policies with Medicaid benefits. Individuals can purchase qualified LTC Insurance plans that meet specific standards.
• Asset Protection: A key advantage of the program lies in its potential to protect a portion of an individual's assets when applying for Medicaid to cover long-term care costs based on the total benefits paid by the LTC policy.

• Dollar-for-Dollar Asset Disregard: Policyholders who exhaust their private Long-Term Care Insurance benefits can apply for Medicaid without exhausting a majority of their assets. 

This feature allows individuals to preserve a larger portion of their savings for themselves or their families while still qualifying for Medicaid assistance if needed. In other words, a policyholder would not have to have little or no income and assets to be eligible for Medicaid long-term care benefits. 

As of January 1, 2021, no insurance companies currently offer new policy purchases of partnership-qualified products in New York State. New York currently requires partnership-certified policies with 5% compound inflation protection. The rules in New York make policies unaffordable, so companies have withdrawn them until the state reviews its rules to make them similar to those of other states. 

There are no new partnership policies available for purchase at this time. Traditional Long-Term Care Insurance and hybrid policies are available for purchase, but they do not include the additional dollar-for-dollar asset protection. Those with a partnership-certified LTC insurance policy still enjoy the additional asset protection these policies offer. 

Should New Yorkers Buy LTC Insurance? If So, When?

Yes, absolutely. New Yorkers who have income and savings to protect should consider obtaining an LTC policy as part of their retirement plan. If you have limited income and savings, buying an LTC policy would usually not be recommended as you could easily qualify for New York's Medicaid long-term care benefits.

LTC Insurance provides guaranteed tax-free benefits to pay for your choice of quality care services. The policyholder gets to decide the benefits of their policy. Premiums are based on several factors, including age, health, gender, and marital status. The policy benefits are custom-designed. A qualified LTC Insurance specialist can help design a plan and shop the available insurance companies to find the most affordable options based on your age and health. 

Most people obtain coverage in their 40s and 50s when premiums are very affordable; however, depending on their health, affordable options can be found in their 60s and beyond. 

Tax Incentives for LTC Insurance in New York

There is a tax credit for 20% of Long-Term Care Insurance premiums paid for a qualified policy approved by the state superintendent of insurance. Persons paying the premium for others are also eligible for the tax credit (as well as their own policy, if applicable) regardless of others' tax dependency status; i.e., the adult child could pay a premium for parents and get a tax credit even if parents are not dependents. A tax credit is not refundable; unused credits may be carried forward.

Nonresident taxpayers and part-year resident taxpayers are subject to the limitations for resident taxpayers. The credit is computed by multiplying the credit amount determined for a resident by the nonresident's New York source fraction as defined in New York Tax Law section 601(e)(3).

• Long-Term Care Insurance New York Tax Credit (ny.gov)

Is Your Family Ready for What's Coming?

All New York families will face aging, so it's important to get ready now to protect your money and make things easier for your family.

If you wait too long to talk about long-term care or don't look into affordable Long-Term Care Insurance, it could end up costing you and your family a lot more than just money.

Adding Long-Term Care Insurance to your retirement plans is a great way to feel more at ease about the future. It helps keep your retirement savings, like your 401k and other investments, safe. Plus, it means your family can be there for love and support, not just caregivers.