Cost Of Long Term Care Insurance: Can you Afford it? Is It Necessary?
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It wasn’t so long ago that long term care insurance (LTC) was a definite consideration and possible purchase as Americans plan for their retirement years. However many changes have occurred in recent years regarding insurance companies adjusting and in some cases grandfathering plans and discontinuing offering long term insurance.
As tends to be the norm for those purchasing health insurance policies, costs have and continue to increase. Depending upon the provider and your demographics, long term care insurance plans may not be affordable for Americans in many income brackets.
Lack Of Demand For Long Term Care Policies
There continues to be an exodus of insurance companies offering new long term care policies. This has been attributed to a variety of factors including:
- An increase in life expectancy
- Underpriced premiums in the past which resulted in a financial loss to long term care providers
- Unaffordable premiums for middle to lower income Americans
- Lack of demand by higher income Americans who can afford the premiums but choose to self finance long term care
- Increased life expectancy for women
Long Term Care Insurance Quotes And Plans
For those who have followed the journey of long term care insurance, it is becoming increasingly difficult for prospective buyers to purchase a policy. Prospective buyers are absolutely advised to obtain quotes for multiple insurance providers. Many insurance companies have or are pulling out of the market due to costs. Insurance companies are also indicating their desire for married couples versus a single woman due to a woman’s prospective life span.
An interesting quagmire is the increased life expectancy of women. Married women are usually the prime caregivers for their husband. A common scenario is a married couple has a long term care policy; but the woman takes on the majority of the care. The husband passes and the women may live many years – and if incapacitated by an illness – many years which may require accessing the long term care insurance. It should also be noted that each policy and premium is unique to the individual and/or couple as to what services are offered and paid for by long term care insurance.
According to a data by the United States Heath and Human Services (HHS) the companies offering have quickly diminished since 2002. In , 102 companies offered long term care insurance and by 2012 the number had decreased to less than 15 companies.
Major insurance companies who previously offered long term care insurance have exited the field and no longer offer LTC policies. Companies include: Metlife, Humana, Aetna, Prudential and Nationwide Financial. Companies such as Genworth have redesigned their plans and greatly increased premiums for existing customers.
The Cost Of Long Term Care Insurance
A very interesting article on the economics of Long Term Health Insurance was written by Lewis Mandell of the PBS Newshour. Mr. Mandell explores the specifics of the long term care insurance costs versus the costs one might encounter for extended care. Scenarios differ depending upon ones’ financial and marital status. When calculating the costs of long term health insurance versus the gain, this author concludes saving for long term care can be more cost effective than purchasing a policy in many instances.
Obamacare And Long Term Care Insurance
There were attempts to include optional long term care insurance in the Patient Protection And Affordable Care Act. It was proposed that patients would receive a cash stipend to assist in paying premiums. The provisions were not included in the final passage of the Act.
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