Over $12 Billion in Long-Term Care Insurance Claims Paid in 2021

According to a trade group's annual report, American families received a huge amount of Long-Term Care Insurance benefits in 2021 to help pay for the growing costs of long-term health care services and supports. These benefits pay for quality care options easing the stress and anxiety otherwise placed on adult children.

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Over $12 Billion in Long-Term Care Insurance Claims Paid in 2021
5 Min Read January 3rd, 2022

Long-term care continued to be in the news throughout 2021, and those who owned Long-Term Care Insurance received a record amount in benefits, according to national consumer education and trade group.

The American Association for Long-Term Care Insurance (AALTCI) released its annual report showing that the nation's top insurance companies paid $12.3 Billion in claims in 2021. That amount is a significant increase over previous years, showing a substantial rise in policy usage.

Long-Term Insurance Claims

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Much of those benefits paid for in-home caregivers, adult day care centers, and assisted living and memory care facilities, reducing the need for traditional nursing home care. 

The AALTCI says that about 73% of new Long-Term Care Insurance claims start with the policyholder receiving care in their own home. Some 18% begin their claim receiving benefits at an assisted living facility. Only 8% start benefits in a nursing home. 

There was an increase of about $700,000 increase in the amount of LTC Insurance benefits paid in 2021 compared to 2020. The AALTCI says this shows that these policies are working for American families.

LTC Insurance Pays

"Take note if you doubt the value of Long-Term Care Insurance protection or question whether insurers are paying claimants," says Jesse Slome, AALTCI's executive director.  

Since 2018 there has been a $2 Billion increase in the amount of Long-Term Care Insurance benefits paid by the top insurance companies. Long-Term Care Insurance is custom-designed, and policyholders select the amount of benefits they wish to have and if they want those benefits to grow with inflation. 

LTC Insurance is Custom Designed - Benefits Paid Vary Widely

As many consumers buy smaller plans or live in states where the cost of long-term health care is much less, the average yearly benefit nationwide is $36,600. However, long-term health care costs are rising rapidly due to the increased demand for care and higher labor costs. Since most people today purchase coverage in their 50s, they include inflation benefits. The total amount of benefits paid should start increasing rapidly in the future as these benefits increase in value over time. 

However, this is just one snapshot, as these numbers do not include data for those who have purchased hybrid or linked-benefit policies. These include life insurance or annuity policies that also pay for qualifying long-term health care needs.  

There is a wide variety of these types of policies; however, only those that meet federal guidelines under Section 7702(b) of U.S. code offer comprehensive long-term care benefits that have the consumer protections required by federal law. 

When you include benefits paid by all types of long-term care-related plans, billions are being paid by insurance companies to help pay for quality long-term health care options, including in-home care, which most people desire.

More People Need Long-Term Health Care. Numbers Growing in the Future

Due to advances in medical science, greater longevity has created long-term care problems worldwide. Families get caught off guard when their parent needs help with daily living activities or require supervision due to dementia. Often, a family crisis develops when they find out that health insurance, including Medicare and supplements, pays little or nothing toward most long-term health care services.  

Medicaid is not an option for everyone as that program will pay for long-term health care only if the individual has little or no income and assets. As a result, the individual will have to self-fund their care or family members; often, a daughter or daughter-in-law will become a caregiver, a role they are usually not trained or prepared to perform. 

Cost of Care Rising Nationwide

According to the LTC NEWS Cost of Care Calculator, professional long-term health care costs are increasing quickly nationwide. The costs vary depending on where the care recipient lives and the type of care required.

You can find the current and future cost of care services where you live, along with state-specific information on planning, tax information, and care options, on your state page of the calculator - Cost of Care Calculator - Choose Your State | LTC News.

Long-Term Care - Financial and Family Problem

The need for long-term health care grows as you get older and start seeing a decline in your health, body, and mind. About 48% of U.S. adults who reach the age of 65 will need long-term care services, according to the U.S. Department of Health and Human Services. 

But the consequences of long-term care on American families are more than just a financial problem. Yes, long-term care is a significant cash flow problem; however, the effects on families are also considerable.

In 2021 41 million unpaid family caregivers were provided about 34 billion hours of care — worth over $470 Billion. There is a huge economic impact on these unpaid caregivers as they leave jobs or reduce hours in order to juggle their role of caregiver with their career.

However, there is more than just juggling work. Most of these family caregivers also have families of their own. Their spouses and children are impacted, creating stress, burden, and anxiety on everyone. 

Owning LTC Insurance is Owning a Solution

When you own an affordable Long-Term Care Insurance policy, you will have access to your choice of quality care options in all types of settings, including at home. These insurance benefits help reduce the dependence on the family, giving loved ones more time to be family instead of caregivers.

Partnership Long-Term Care Insurance also offers additional dollar-for-dollar asset protection - What is a Long-Term Care Partnership Policy? | LTC News.

Shared spousal benefits and policies with a return of premium or death benefits are also available. But to avoid a family crisis in the future, you need to have a policy in place now.

Long-Term Care Insurance is medically underwritten, so you need to have reasonably good health to obtain coverage in the first place. Every company has its own guidelines, so seek the help of a qualified Long-Term Care Insurance specialist who works with the major companies. 

Long-Term Care Insurance is paying out billions in benefits, but it can only help you and your family if you have a policy in place when you need it. The specialist will review your health, family history, and other factors and match you with the coverage at the best value. Most experts suggest doing so before retirement, ideally in your 40s or 50s.

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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

Long-Term Care Insurance is an affordable way to address the costs and burdens of aging and changing health. You will have guaranteed tax-free resources to pay for the high care costs in any setting you wish, including care at home. Your loved ones will have the time to be family instead of caregivers.

Most people obtain coverage in their 50s. However, some options are affordable for those in their 60s and beyond. Remember, Long-Term Care Insurance is medically underwritten, so you need to act before you have significant changes in your health and mobility. 

If you have yet to plan for your longevity, better take care of your planning now as well. Several types of Long-Term Care Insurance options are available, and one should fit your needs.

Seek Professional Guidance

Insurance rates are regulated, so no insurance agent, agency, or financial advisor can give you special deals. However, premiums do vary over 100% between insurance companies 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.

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 for the future 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.

Find Quality Caregivers and Long-Term Care Facilities

If your parent or loved one needs care now - or soon - you will need to find the appropriate care in the right setting depending on their needs.

Take a moment and read - 

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. 

Find Quality Caregivers and Long-Term Care Facilities

If your parent or loved one needs care now - or soon - you will need to find the appropriate care in the right setting depending on their needs.

Take a moment and read - 

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