Schedule Your Appointment - Fill Out the Form Below
Skip to content
The Law Office of Antoinette Bone, PLLC
Euless, TX
  • Home
  • Practice Areas
    • Estate Planning
      • Estate Planning FAQs
      • Asset Protection
      • Ethical Wills
      • Special Needs Trusts
      • Special Needs Resources
    • Elder Law
      • Medicaid
      • Medicaid Planning
      • Medicaid Resources
      • Veterans Benefits
    • Probate
    • Guardianship
  • Our Firm
    • Attorney
    • Speaking Opportunities
    • Firm Overview
  • Getting Started
  • Videos
  • Resources
    • Blog
    • Gallery
  • Contact
  • Careers
817-462-5454

Long-Term Care Health Insurance is on the Verge of Collapsing

Posted on December 23, 2020 | by Lori Pulvermacher

Routine estimates predict that about 50 percent of older adults will require long-term care at some stage of their lives. If you are an adult 65 or more, the percentage moves up to 70 percent. However, the demand for long-term care far outnumbers an affordable or even existing supply. For years the private sector long-term care insurers have been fleeing the marketplace. Americans who currently carry long-term care insurance are a small fraction, about 7 percent, adults over 50 years of age. There is a private sector inability to meet Americans’ overwhelming long-term care needs at an affordable price. The US healthcare system’s long-term care options are rapidly faltering as it is impossibly expensive, inefficient, and a poor performer for both seniors and industry.

Long-term care provides a broad array of supports and services to elderly patients and the disabled in daily life activities. These activities include bathing, toileting, dressing, transferring, and eating. Long-term care is also support for patients who have Alzheimer’s, dementia, diabetes, and other chronic conditions. Providers of long-term care operate in nursing homes, assisted living facilities, and private homes. Fewer than one in thirty Americans own a long-term care (LTC) insurance policy, and only about seven percent are adults are over the age of 50. Despite the aging US population, the raw figure of 7.5 million LTC insured has barely moved since 2008. According to prospect.org, these statistics come as no surprise as LTC insurance premiums keep increasing while average policy benefits decrease, as shown below.

When long-term care became part of the health care insurance industry in the 1970s, there was a wild mispricing error due to poor actuaries, which severely underestimated the cost of such plans. Subsequently, some insurers have abandoned the market altogether. In the year 2000, there were 100 policy providers; there are fewer than a dozen today, and it is harder than ever to become qualified. Insurers strain to deny policy applications to as many people as possible.

The American Association for Long-Term Care Insurance (AALTCI) finds that between 44 to 51.5 percent of applicants aged 70 or more are declined coverage. Nearly one-third of adults between 60 and 65 are refused. Even those in their 50s experience a 21 percent rate of application refusal. Rejection is prevalent because any combination of two or more chronic conditions is a basis for near-automatic disqualification. Certain diseases are also grounds for denial, such as AIDS, diabetes requiring insulin shots, stroke history, and multiple sclerosis, to name a few.

Despite large premium increases and increasingly difficult qualifications, long-term care claim losses still exceed expectations and have since 2008. Under current market conditions, insurers find it impossible to structure a profitable long-term care program. Moreover, many insurance coverages for the senior living industry are experiencing increases in their rates and premiums. Some insurance brokers report that even accounts with a clean loss history are experiencing premium increases at a minimum of 12 to 15 percent. Additionally, in the next year to two years, assisted facilities’ insurance costs could double or triple. Average policy benefit payouts will find it difficult to address the future long-term care needs. Carriers are consolidating to remain profitable, but this is shrinking senior living market coverage. Facilities have fewer options, and remaining insurance carriers increase premiums as they continue to restrict coverages and limits. The situation is bad news for seniors and near seniors, as rising business costs are generally passed on to the consumer.

Elements of sticker shock, denial of need, and wishful thinking keep most Americans from purchasing a long-term care plan even though they will most likely need one in their later years. Meanwhile, private long-term care insurance is in jeopardy as a result of industry non-profitability. Even with critical needs, without government intervention, there is a looming collapse of the long-term care insurance market.

If you are concerned about how you or a loved one will pay for long-term care, we can help. Contact us to set up a time to discuss planning opportunities that may be available to help lessen the financial burden of long-term care.

Schedule an appointment or call our office by dialing (817) 462-5454.

 

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer’s particular circumstances.

Nothing in this message is intended to provide legal advice.  This message is for educational purposes only.

Posted in Long-Term Care Planning | Tagged insurance, long term care

Post navigation

How to Pass on Family Values as Part of an Inheritance
Many Retirees Are Scared to Spend their Wealth

Categories

Archives

  Thank you for Signing Up

Join Our Newsletter

Please complete this form to create an account, receive email updates and much more.
  Please correct the marked field(s) below.
Contact Email  *
1,true,6,Contact Email,2
First Name 
1,false,1,First Name,2
Last Name 
1,false,1,Last Name,2
*Required Fields

Get In Touch

“We believe that your call should be returned within 24 hours.”


800 N. Industrial Blvd., Suite 106
Euless, TX 76039

Phone: 817.462.5454
Email: info@abonelaw.com
Driving Directions:

While my address is Industrial Blvd, we are actually on Clinic Drive. Look for the tall red Super Value Pharmacy sign. Whether coming from the North or the South, you will turn off of Industrial Blvd. onto Clinic Dr. Our building is located up the hill just past the Super Value Pharmacy at the far end of the building.

Office Hours

Mon-Thurs 8:30am-5:00pm
Fri/Sat/Sun Closed
Leave A Review
© 2022 The Law Office of Antoinette Bone, PLLC | A Website Design by Ahrens Technologies

DISCLAIMER: Material presented on The Law Offices of Antoinette Bone, PLLC website is intended for information purposes only. It is not intended as professsional advice and should not be construed as such. If you communicate with us through this site or otherwise in connection with a matter for which we do not already represent you, your communication may not be treated as privileged or confidential and does not create an attorney-client relationship between you and the firm. If you communicate with us by e-mail in connection with a matter for which we already represent you, please remember that Internet e-mail is not secure and you should avoid sending sensitive or confidential Internet e-mail messages unless they are adequately encrypted.