The financial security profession can lead us through LTC challenges

If I told you that seven out of 10 Americans age 65 and older will require long-term care support at some point, would it worry you? Unfortunately, this isn’t a hypothetical situation. 

According to joint research from the Urban Institute and the U.S. Department of Health and Human Services, that’s exactly what our nation is facing in the coming years. Couple this with Medicaid spending already surpassing more than $750 billion, and clearly the U.S. has an enormous challenge on its hands. The good news is our profession — as it does for so many other financial conundrums — can help lead us through this looming crisis. 

By now, especially given the scope of the problem, it’s no surprise that states such as Washington, California and Minnesota are actively seeking solutions to address funding options for long-term care. But the problem with proposals such as the Washington state model is that the $36,500 public benefit falls well short of being able to adequately serve an individual’s long-term care needs. Plus, the Nov. 1, 2021, cut-off date for an exemption significantly hindered private-sector solutions to the problem. 

The good news is, despite the model’s shortcomings, Washington state’s actions have laid the foundation for other states to start thinking about this issue and exploring potential solutions of their own. For example, the California legislature created a task force to explore potential long-term care solutions in the Golden State. That task force has made progress, having submitted its preliminary report on Jan. 1. And other states, such as Minnesota, are following suit.

At Finseca, our mission is in our name, Financial Security for All. Our members work to pave the path to financial security for millions of individuals and families through holistic financial planning. The reason why is captured by a recent Ernst & Young study, which exhaustively analyzed how life insurance — especially permanent policies, investments and deferred income annuities — outperforms investment-only or investment-plus-other-products approaches in every combination. 

Individuals and families who have life insurance, investments and guaranteed streams of lifetime income through things such as annuities are in a significantly better position to absorb the challenges that life throws their way. Addressing and planning for long-term care is part of that financial security.

It goes without saying that private long-term care solutions must be included in this discussion. Private-market product innovations that combine life insurance with long-term care coverage offer attractive, affordable and portable benefits to consumers. These innovative solutions can bridge the gap between the limited public offerings and the growing need for comprehensive long-term care support. They provide individuals and families with the flexibility to tailor their coverage to their unique needs and circumstances — a win for everyone.

It’s obvious that long-term care is a problem we must solve as a nation. But at the same time, it’s just as obvious that the financial security profession has a critical role to play in addressing this challenge. Financial service professionals have the tools and expertise to guide individuals and families toward solutions that provide the financial security and peace of mind they deserve. By promoting private market innovations and working alongside state initiatives, we can ensure that all Americans have access to the long-term care support they need while preserving their financial well-being. It’s a challenging road ahead, but together, we can navigate it and secure a brighter future for all. 

Melissa Bova joined the Finseca government affairs team in November 2021 as its first vice president of state affairs. She may be contacted at [email protected].