Long-Term Care Insurance Looked at by Senators
U.S. Senators Mel Martinez (R-FL) and Herb Kohl (D-WI) of the Special Committee on Aging held hearings last week looking at long-term care insurance. The hearing is available via webcast.
Long-term care insurance is private insurance purchased by individuals (or by a company for an individual as part of a benefit package) that provides protection in case the person needs long-term medical care in the future. According to the Department of Health and Human Services, 9 million people over the age of 65 are in need of long-term care. By 2020, that number will be close to 12 million. However, less than 10% of seniors have purchased the insurance. Many end up relying on government programs such as Medicaid.
But, Medicaid is a means-tested program, meaning that to qualify one needs to become “poor” enough to qualify. Such a system leads to abuses by families of those who can afford their own care and to huge expenses borne by the states. For example, here in Ohio, fully 38% of the state budget funds Medicaid.
The senators seek to extend a program that seems to be an excellent solution. The Long-Term Care Partnership Program is a plan that encourages the private purchase of long-term care insurance. The application of the program differs state-by-state (and some states have no program). Generally, an individual buys long-term coverage and is entitled to retain assets up to the covered amount and still participate in Medicaid. This encourages the purchase of private insurance and alleviates that burden from the state while allowing participants to retain family assets. It also allows smaller employers to offer some level of long-term care insurance as a benefit. Without such a partnership, experts debate the usefulness of lower level coverage policies contending premium dollars are better spent elsewhere.