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November 12, 2014 at 11:29 AM
Critics of efforts to expand the use of private long-term care insurance (LTCI) sometimes ask whether affordable LTCI policies can cover enough of the costs to help much.
LifePlans Inc., a risk management and research firm, has looked at that question for America’s Health Insurance Plans (AHIP). It says the people who have used LTCI policies to cover LTC costs have received significant help from the coverage.
AHIP is a trade group for health insurers, including LTCI issuers who have a stake in putting LTCI and other insurance-based vehicles for paying for LTC services in a flattering light.
LifePlans has been a part of the LTCI community for years. In addition to AHIP, its client list has included many LTCI issuers. But LifePlans says an analysis of data from private sources and from the U.S. Department of Health and Human Services (HHS) shows that private LTCI has helped most of the care users with coverage pay at least half of their bills.
To learn more about what LifePlans says in its new commentary, read on.
1. Typical LTCI policies should be more than rich enough to pay for home care and assisted living stays.
LifePlans looked at 8,000 people who actually bought LTCI policies in 1995, 2000, 2005 and 2010 and at the benefits in the policies they bought.
They found that almost all of the policies should have benefits big enough to cover the cost of home care, even after the policies had been in force for many years and inflation had worn away some of the policies’ buying power. LTCI policies bought in 1995, for example, should cover an average of 91 percent of the typical daily home care cost in 2015, LifePlans says.
Similarly, LifePlans says a comparison of the policies studied and actual care costs suggests that the LTCI policies bought in 2005 should offer enough benefits to cover typical assisted living facility costs even after the policies have been in force 25 years.
In 2015, a policy purchased in 2005 should have a daily benefit equal to about 144 percent of the typical daily assisted living facility cost, and a policy purchased in 2010 should have a daily benefit equal to 128 percent of the cost, LifePlans says.
