By Ted Gotsch
Policy Content and Publications Manager
Many Americans understand the importance of planning for retirement, yet far fewer have considered how they would pay for long-term care (LTC) if they needed it. With costs rising and care needs difficult to predict, planning ahead can feel overwhelming.
To say the questions and issues involved are challenging is an understatement. Will they have a long-term illness, and if so, for how long? What kind of services might they need? Will they have someone in their lives who can serve as caretaker? There are just so many unknowns. That’s why it’s essential to start thinking about these questions before you might need such care.
November is Long-Term Care Planning Month, an apt time to begin important discussions with loved ones about future care needs, if you haven’t already. It encourages people to think about their future health care needs and financial planning, while raising awareness of the high costs of LTC and the benefits of planning early. Being proactive now can help safeguard loved ones’ quality of life while easing future burdens on family members.
One of the biggest challenges is determining how future care will be financed. The costs of LTC can be substantial, and obtaining insurance coverage can be challenging for many. As the Health Practice Council’s LTC Committee noted last year, an estimated 70% of people over age 65 will need long-term care services at some point during their lives, yet coverage has become increasingly unaffordable.
“The rising cost of health care has resulted in multiple rounds of premium rate increases,” the issue brief states. “Both insurers and regulators are working to improve communication to policyholders about these changes and available coverage options. Insurers are also strengthening their data analytics and policyholder engagement approaches to implement claim and pre-claim management strategies.”
As a result, many providers have moved away from offering standalone LTC insurance and instead developed hybrid offerings that combine life or annuity products with LTC coverage. New sales of these products overtook standalone LTC policies beginning in 2014, the LTC Committee’s document notes.
A new report released by the Life Practice Council’s Life Experience & Assumptions Committee this month found that trend has only accelerated since then, with LTC combo policies now exceeding LTC-only plans by a three-to-one margin. The report also identifies middle age as the primary market for these products.
“Combo product insurers target consumers ages 35 to 64, with those ages 45 to 64 representing the primary market because consumers in this age range are often at a life stage where their income and savings make combo products more financially accessible,” according to the report, “Long-Term Care Combo Products—Modeling, Assumptions, and Risks.”
As it stands, only a third of middle-income baby boomers have a plan for long-term care. Given the costs involved, authorities agree it is important for families to have conversations about a person’s preferences as they age early enough so they can plan and put aside sufficient resources.
LTC planning may involve difficult conversations and uncertain projections, but delaying those discussions can limit future options. Long-Term Care Planning Month serves as a reminder that the best time to consider these questions is well before they become immediate concerns. To learn more about the Academy’s work on LTC, be sure to visit our website (here).
This month focuses on prompting conversations that can be beneficial to consumers. The Academy will continue year-round to support the focus on long-term care as a priority, bringing the profession’s expertise to public policymakers on questions around affordability, access to LTC coverage, and the need to incorporate LTC into broader conversations around aging and financial security.