Why Aren't We Buying Long-Term Care Insurance?

When you start looking at care for an aging parent, you realize something awful, getting supportive care outside of a sudden illness is nearly impossible. Long-term services and supports (LTSS) are some of the most expensive parts of getting older and this is mostly left out of Medicare. That means if you are in need of caregiver services or a permanent care solution (nursing home, memory care, assisted living), the common path is that you pay all of your money until it's gone and Medicaid takes over. This is not how we are sold retirement. We think we are saving to be the old couple on the beach, not the old lady in the home.?

Long-term care insurance should help pay for care in theory. The problem is that less than 10% of people have it. Is this the problem of the consumer or the industry? Much of the narrative around this has been that the consumer is somehow short-sighted or cheap. According to one study, couples turning age 65 face a 5% risk of incurring costs of over $260,000 for LTSS alone. That number will completely devastate most American households. And yet, most of us would take those odds and not pay if the price of insurance was high, but we would be more willing to pay if it were cheaper or it were required, like automobile insurance.?

What would make it better? Is it just price? I think it's both price and complexity. The more people understand what they are paying for, the more they are willing to make the commitment to paying. The horror stories of getting long-term insurance activated are well-known among people trying to secure payments to care facilities for their parents. I like to think that building a better product for the consumer will benefit the insurers as well because part of the issue here is that long-term care insurance isn't structured very well.?

Part of the issue is how insurers can get enough money in premiums that they can invest and, therefore, pay for the future. I know next to nothing about the insurance industry but as I've been watching home insurers move out of Florida and California, it reminds me again that insurers will only insure what they know they can make money on. Long-term care insurance may be a little like flood insurance where we need a national program to bolster it. Most people don't see the need now but we are headed into a massive crisis. Don't take it from me; listen to this podcast with Marc Cohen, co-director of the LTSS Center and professor of gerontology at UMass Boston.

Another component here is that LTSS isn't quite seen as medical care. Sometimes it is but a large portion of caregiving in the home is either being present and watching someone or helping with tasks of daily living. And yet these caregivers are the people who are monitoring their patients and may know more about their conditions and wellbeing than their primary care physician.?

Most people who aren't of retirement age get insurance through their employers. Many of those employers offer long-term care insurance, too, but it's optional and not clearly messaged. Also, people in their 20s, 30s, or even 40s aren't thinking about funding their need for a nursing home in their 70s, 80s, and beyond.?

If we are expecting people to fund their own retirement, mostly without the benefit of pension plans, long-term care insurance should be a way to help prevent catastrophe. Care costs are only going to rise in the future, and even if we think we can save our way out of it, we probably can't. The simplest way to protect yourself is to look into these policies and find one that works for you. I've turned down long-term care insurance in the past. Now I know it's one of the things that is most important for me to have. There is a possibility that the government will get more serious about creating public coverage, but we can't wait and hope for that to happen.?