Disrupting the Marketplace: The State of Private Long-Term Care Insurance, 2018 Update

Kathleen Ujvari, AARP Public Policy Institute

Published August 23, 2018

Long-term care insurance (LTCI) can play a role in financing long-term services and supports (LTSS) needs; however, the high cost and complexity of these products and concerns about rising premiums have affected consumer demand. The high out-of-pocket costs of LTSS are unaffordable for most people in every state and, despite what many people believe, Medicare and Medigap insurance do not cover LTSS. Without adequate savings to cover the cost of care, LTSS recipients may have to instead rely on other sources—such as Medicaid coverage or support from unpaid family caregivers—to provide care needs.

The LTCI industry is undergoing a transformation and is responding to consumer concerns by developing products that are more affordable and flexible to meet the coverage needs of consumers. Traditional stand-alone policies are being offered with coverage periods of one to three years or more, while newer short-term care insurance policies offer even shorter coverage periods. Hybrid insurance policies link LTCI with an annuity or life insurance product using a long-term care or chronic illness rider.

This is just the beginning. With 10,000 people in the United States turning age 65 every day and with more people living well into their 80s—an age at which there is considerable demand for LTSS—ongoing and innovative approaches to consumer products that help finance long-term care needs will be needed more than ever. This report includes facts and figures on LTCI and information on the emerging market for short-term care products.

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