Long-term care crisis ‘sneaking up on most Americans’

A public health crisis is "sneaking up on most Americans" and that crisis is long-term care, according to the executive director of the National Association of Insurance and Financial Advisors Limited and Extended Care Planning Center.

In a webinar on Monday, Carroll Golden presented some statistics that show a long-term care crisis is looming.

• 70% of adults over age 65 will develop severe long-term needs before they die but only 48% will receive paid care.
• Only about 7% of Americans own a private long-term care policy.
• High care costs quickly exhaust personal savings and force a spend down to poverty levels to qualify for Medicaid.
• Unpaid care often is left to family members, who face significant financial and emotional burdens.

"When we look at the cost of care, it’s only increasing and it’s increasing dramatically."
— Carroll Golden, executive director, NAIFA Limited and Extended Care Planning Center

“When we look at the cost of care, it’s only increasing and it’s increasing dramatically, especially when it comes to home-based care,” Golden said. “We also know statistically that most care still being handled by family members. Some of it is cultural but it really impacts the reality that we have four generations in the workplace now, and somebody will have to handle the care.”

“Almost all of your clients either will need care or will become a caregiver,” she added. “This is an opportunity for you to discuss long-term care with your clients.”

Long-term care costs caregivers as well as care recipients, Golden said.

• 41 million caregivers provide an estimated 43 billion care hours each year. This equals an estimated $470 billion in economic impact.
• 60% of caregivers are employed; 40% of them full-time.
• Caregivers spend an average of $7,000 on out-of-pocket expenses related to care.

The U.S. spent more than $400 billion in long-term services and support in 2020, amounting to nearly 10% of all national health care expenditures, Golden said. Medicaid spent $53 billion on institutional care and $162 billion on home and community-based care, more than half of all long-term services spending.

Costs impacted

State budgets are increasingly expanding to cover long-term-driven Medicaid costs, said Maeghan Gale, NAIFA policy director, government relations. In Washington state alone, she said, Medicaid expenditures related to long-term care costs are $2.1 billion annually – 5% of the state’s total budget – and rising.

Washington is one state that addressed the long-term care issue with the WA Cares program. In this program, workers pay 0.58% of wages with no employer match and no wage cap. Those who contribute over 10 years are eligible for a lifetime maximum of $36,500 to cover long-term care needs.

Golden said that 50% of agents surveyed in Washington said they believe the WA Cares program prompted positive conversations about long-term care. About 500,000 Washington residents were able to opt out of the WA Care program by purchasing their own long-term care coverage.

Public/private partnerships are a concept that could help fund long-term care needs, Gale said. In this hybrid plan structure, a public benefit is designed to coexist with private insurance products.

NAIFA established a State LTC Legislative Working Group to explore and recommend policy positions for NAIFA to pursue through its government affairs capabilities.

Partnership needed

“We recognize that neither the public nor the private sector are fully equipped to handle the problem alone,” Gale said. “A public/private partnership is best but the devil is in the details.”

A public LTCi policy, she said, should:

• Be less than 1% of a person’s income.
• Be based on standard activities of daily living.
• Provide an exemption for those who never could collect benefits.
• Provide an initial opt-out for private policyholders.
• Clearly define eligible private coverage, which includes a wide variety of options.
• Provide coordination and incentives to elect private coverage in the future.
• Require recurring certification of private policies.
• Allow for some level of portability.

“The landscape for long-term care is significantly changing,” Gale said. “It’s more imperative than ever to include long-term care in the client conversation.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].