When It Comes To Long-Term Care Insurance, Americans Don’t Get It
A newly-released survey shows just how conflicted Americans are about long-term care insurance. And how unrealistic they are about how much long-term care costs and how much insurance they can buy for what they are willing to spend. The survey, completed in 2014 by the consulting firm RTI International and the survey research firm GfK Research for the US Department of Health and Human Services, found that consumers prize two attributes above all others when they think about long-term care insurance: They want lifetime coverage and low premiums. Their willingness to buy any long-term care insurance declines dramatically as premiums rise and the benefit period shrinks. For instance, fewer than half of those surveyed were willing to spend more than $50-a-month for a long-term care insurance policy that covers $100-a-day for 3 years. In the real world, it is possible for a 60-year-old to buy such a policy. But it would come with no inflation protection beyond the right to buy additional insurance in the future. And it would provide a total maximum benefit of only about $109,000. To put it another way, it would pay less than half the daily cost of a nursing home stay or about five hours a day for home health aide time. Not nothing, for sure, but much less protection than consumers say they want.
Curiously, the survey found that while respondents are very sensitive to changes in the length of a policy’s benefit period, the size of the daily benefit was much less important to them, especially once it reaches $100. There was little difference in the level of interest for a $100-a-day benefit and a $300-a-day benefit.
David Wingate is an elder law attorney who practices in Frederick and Montgomery Counties, Maryland. The elder law practice consists of wills, trusts, powers of attorneys, asset protection, and Medicaid planning.