posted by Alicia Caramenico
on November 17, 2015
About 70 percent of people age 65 and older will need long-term care services sometime during their lifetimes. These services can be expensive, but long-term care (LTC) insurance can provide individuals with the support they need for long-term care. In fact, a 60-year-old person would have to set aside $1,666 every month over 22 years to match the protection provided by LTC insurance, according to a recent AHIP report.
Private long-term care insurance offers important cost-savings for the Medicaid program. The private health insurance community has been partnering with state Medicaid programs so that people who purchase LTC policies can access Medicaid benefits without having to exhaust all of their assets to Medicaid levels, if and when their private LTC benefits run out. For example, the AHIP report found fewer than 5 percent of nursing home residents with LTC policies spend down to Medicaid, while between 21 percent and 31 percent of those without LTC coverage would spend down to qualify for Medicaid.
In this way, private LTC coverage helps Medicaid beneficiaries keep their savings and plan responsibly for future LTC needs. Public-private partnership plans protect assets that match the amount of benefits received from the policy. For example, when a consumer buys private LTC coverage with a total benefit value of $200,000, when he needs care, the consumer uses those LTC benefits first. Once LTC benefits are used up and a person needs more care later on in life, the person can apply for Medicaid with that $200,000 amount in “exempt assets,” so he doesn’t have to transfer his house to a child or sell it to qualify for low-income coverage.
What’s more, LTC policyholders receive 35 percent more total hours of long-term care than those who don’t have private coverage. In addition to extra care, LTC coverage enhances access and flexibility, as LTC policyholders are better able to get care in the setting of their choice, such as at home or an assisted living facility.
Building on the strengths of the private LTC insurance market, public-private partnerships provide and pay for critical LTC services that benefit millions of consumers and beneficiaries across the country. These partnerships are becoming more important than ever as the American population lives longer and LTC needs grow.