State tax incentives and partnership programs for long term care insurance have not stimulated LTC insurance sales in the states that offer them, a researcher concludes.
Many states have been using incentive programs to try to boost LTC insurance sales in the face of a potentially significant financial crisis due to the aging of the baby boom generation, says David Nixon of the University of Hawaii Public Policy Center.
State tax incentives are so small in comparison to the total cost of LTC premiums that they probably “have not induced a single new person to purchase long term care insurance” in the 12 states that offer the incentives, Nixon writes in an analysis of the effects of state LTC insurance incentives.
State “partnership” programs, which permit consumers to coordinate private LTC insurance benefits with Medicaid nursing home benefits, also appear to have little effect on consumer behavior, Nixon writes.
Financial, health and family structure factors appear to be the main forces that drive LTC insurance sales, Nixon writes.
“Those states with a more limited availability of children for caregiving and in which the senior population is more likely to require long term care experience a significantly larger market for long term care insurance,” Nixon writes. “In states with a greater availability of children for caregiving, health limitations are not a significant factor in the long term care insurance market.”