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

Affordable Long-Term Care Insurance paid American families $11.6 Billion in Benefits in 2020 alone. Planning for the financial costs and burdens of aging is essential to 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 13th, 2021

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. 

This care cost is expensive and often drains a family’s savings and places burns on a family member who often supplements this care or provides most or all the care.

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. The 2020 total was $11.6 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 other factors, and the total amount of benefits you wish to purchase.

Often people wait until health events to occur to think about planning for long-term 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, and 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 is also supportive of additional tax benefits for Long-Term Care Insurance.

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

Forty-five states offer special Partnership Long-Term Care Insurance policies that provide dollar-for-dollar asset protection. These policies offer 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

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