New Research Quantifies Value of Long-Term-Care Insurance

A new report from the American Council of Life Insurers (ACLI) finds that private long-term-care insurance (LTCI) can save Medicaid $47.7 billion and reduce consumers’ out-of-pocket expenses to pay for care by $69 billion. The report, “Who Will Pay for Our Long-Term Care,” also shows that women are at a higher risk of needing long-term care than men.

“After age 65, women are far more likely than men to need the services of a nursing home, outnumbering men about 3 to 1,” the report says. “A typical elderly female resident spends 2.6 years in a nursing home, compared to 2.3 years for a typical male.”

The report emphasizes the need for people to plan for the high and rising cost of long-term care. “Since 2005 the cost of nursing home care has grown by 4.5 percent annually, compared to an overall inflation rate of 2.5 percent,” the report says. “If this trend were to continue, the average cost of a one year stay in a nursing home will increase from about $81,000 per year in 2014 to $146,000 in 2030.”

Other long-term-care services may cost less but are still expensive. Non-certified home health aides typically charge $20 per hour; the average base rate for the services of an assisted living facility is $42,000; and one year of adult daycare services is $16,900.

LTCI can help people pay for the cost of care in a setting that allows them to live with dignity and without being a financial burden on their families. It can be purchased as an individual policy or through a group plan offered by an employer. LTCI also can be added as a rider to a life insurance policy or an annuity contract.

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By Ayo Mseka
Editor-In-Chief