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Study: Rethinking Long-Term Care Financing Necessary to Create More Attractive Options
Although there is no ideal solution, more Americans would have a greater incentive to purchase long-term care plans if those plans were changed and their costs reduced, according to a new study that offers potential consumer choices by examining three new proposed insurance options.
The new study by the Urban Institute’s Melissa Favreault, Howard Gleckman, and Richard W. Johnson, released by Health Affairs at the National Press Club in Washington, DC, this week offers three models: a program with a front-end benefit beginning after a 90-day waiting period and covering up to two years of need; catastrophic-only (or back-end) program beginning after a waiting period of two years but providing a lifetime benefit afterward; and a comprehensive program beginning after a 90-day waiting period and providing a lifetime benefit.
Each option outlined in the report “Financing Long-Term Services and Supports: Options Reflect Trade-Offs for Older Americans and Federal Spending” was presented as voluntary insurance – subsidized and unsubsidized – and as a universal mandatory program. When considering the major aims of reducing Medicaid costs or increasing insurance coverage, the researchers found that mandatory options were the most beneficial.
Under current policies, individuals fund approximately half of their paid care out-of-pocket. “Partly as a result of high costs and uncertainty, relatively few people purchase private long-term care insurance or save sufficiently to fully finance long term services and supports; many will eventually turn to Medicaid for help,” reads a study summary.
Urban Institute projections show that the average American turning 65 today will incur about $138,100 in future lifetime expenses for severe long-term needs. The institute also says that the number of older Americans with severe LTSS needs will increase 140 percent between 2015 and 2055, reaching 15.1 million. Over that same period, the report notes, there will be an 80 percent increase in the U.S. population ages 65 and older and a 190 percent increase in the population ages 85 and older.
Examining and providing recommendations addressing the nation’s long-term care financing crisis is a key imperative of Argentum and its members. It will be addressed through educational sessions and by speakers at the upcoming Senior Living 2025 roadmap for senior living, and at Argentum’s Annual Conference & Expo, May 9-12 in Denver at the Colorado Convention Center.
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