What Is Going to Happen with Long Term Care Insurance?

Americans are living longer, so debilitating diseases such as Parkinson’s and Alzheimer’s are rising, making long-term care vital.

Long-term care insurance offered those facing retirement a new option to offset the cost of assistance that many require later in life. From daily tasks such as cooking and cleaning to the all-encompassing care provided in nursing homes or assisted-living facilities, long-term care insurance covers many of the expenses that health insurance, Medicare or Medicaid generally don’t.

According to the Centers for Medicare and Medicaid Services, about 60 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime. More than 40 percent will need care in a nursing home for some period of time, making long-term care expenses an essential component to consider when planning for retirement.

Though long-term care insurance may sound like a great alternative to saving on your own, the insurance can be extremely costly, experts say, and often doesn’t include an option to compensate loved ones if they're the ones doing the caregiving.

The Supreme Court, upheld President Barack Obama's health care overhaul, including the requirement that most Americans have health insurance. The jury's still out on how the ruling could potentially impact senior-care options and long-term care insurance.

The costs of long-term care can be considerable: $10,000 or more a month, depending on whether the individual is in a nursing facility or at home requiring round-the-clock care. Given an extended period of disability or need, these costs could wipe out the resources of many families. Therefore, long-term care, or LTC, coverage provides a way to cover some or all of those very high expenses for a far lower cost in the form of premiums.

However, the major con of LTC insurance is that the premiums are still very high, causing many individuals who might otherwise purchase to decide they can't afford it.

Finding a long-term care insurer isn’t as easy as it used to be. Companies that provided long-term care insurance have left the market place for a number of reasons. Companies didn’t realize that people would live as long as they currently do, nor did they expect interest rates to drop as low as they have.

Additionally, the sales of long-term care insurance have shown quite a downward trend, according to data from the Life Insurance Marketing and Research Association.

The long-term care insurance industry is in flux, primarily because many carriers did not price the policies correctly in the first place. They assumed far more policies would lapse — the way they do in the life insurance market — than is the case, which meant they had underpriced the premiums.