Will Long-Term Care Insurance See Reform?

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Long-term care insurance will not be reformed, at least by federal government edict.

The numbers are sobering when it comes to the likelihood of needing long-term care.

It is well worth your time to read an in-depth study on this subject from the U.S. Department of Health & Human Services.

Spoiler alert: the risk of needing long-term care once you reach age 65 is a daunting 70%.

Yikes!

And paying for long-term care is expensive.

This is especially true if you require admittance to a nursing home for other than a brief stay for rehabilitation.

Some individuals may qualify for Medicaid, if they meet strict financial eligibility requirements.

Others will need to use savings or purchase long-term care insurance.

Even so, the insurance system is imperfect.

According to a recent Forbes article titled “The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To,” President Trump had officials review the system to assess its strengths and weaknesses.

Congress has chosen not to make long-term care insurance reforms.
A team of officials reviewed reforms recommendations for long-term care insurance.

Who did he include in this task force?

It included officials from the Labor, Treasury, and Health and Human Services.

It also included the Office of Management & Budget (OMB).

What did they do?

This team reviewed the National Association of Insurance Commissioners (NAIC) proposals.

After reviewing the document, the team made recommendations but chose not to make significant changes to the system for long-term care insurance.

The team did not endorse an “opt-out” model for employer-base LTC insurance.

What did they propose?

They recommended providing more public education on the importance of planning in advance for long-term care insurance.

They also recommended Congress allow the Treasury to lower the level of inflation protection required for private, a long-term care insurance policies.

What does this mean?

The policies would be required to increase benefits annually by 5 percent to qualify for a special tax benefit.

In turn, this would lower premiums.

The task forces also recommends private insurers offer incidental benefits to policyholders before they become eligible for full long-term care benefits.

What would this do?

It would allow insurers to provide assistance for the cost of caregiver training, home modifications, and information services early on to meet the needs of long-term care policyholders.

In short, this could proactively lower the cost of long-term care and help keep the insured both safe and happy.

Although these recommendations were evaluated, they were not officially endorsed by the tank force.

Instead, the task force recommended further review and assessment by Congress.

The task force did not offer endorsements for major new tax subsidies for individuals who purchase long-term care insurance.

Ultimately, the task force determined there was no public policy change able to fully solve shortcomings with private long-term care insurance.

Gretchen and I have had our own long-term care insurance policies for 12 years now.

I am thankful we purchased them when we did and I recommend you do the same.

Delay will only increase the premiums the longer you wait and you run the risk of developing a disqualifying health condition.

Reference: Forbes (Aug. 12, 2020) “The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To.”