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.
2. Typical LTCI policies of any vintage offer enough benefits to pay at least half of the average daily nursing home cost, and newer policies should pay more than 70 percent of the cost.
LifePlans notes that consumers typically keep the cost of LTCI premiums down by making a conscious decision to pay a portion of nursing home costs with their own cash.
In spite of that decision, the typical policies studied should all offer enough benefits to cover half of the cost of nursing home care, even after the policies have been in force for 25 years, and policies purchased in 2000 or later should cover more than 60 percent of the cost, LifePlans says.
3. HHS records show that private LTCI paid at least half of real-world costs for 91 percent of patients, and most or all of the costs for 73 percent.
LifePlans looked at figures from a U.S. Department of Health and Human Services (HHS) claim experience study published in 2007. That study included LTCI coverage holders who received long-term care in a variety of settings for a 16-month study period.
Over that period, the LTCI policies paid at least 50 percent of the LTC costs for 91 percent of the insureds, and most or all of the costs for 73 percent, LifePlans says.
LifePlans contends that the figures support the argument that encouraging middle-income people to buy private LTCI would be a good way to encourage private LTC planning and hold down Medicaid spending on LTC services.
Image: HHS Secretary Sylvia Mathews Burwell (HHS image)