If you haven’t read the study released in November by Boston College, you should be aware of its findings.
Boston College’s Center for Retirement Research published findings that focused on single adults who need to face long-term care – a segment of society which now makes up the majority of Americans. The study finds that long-term care insurance makes financial sense only for the richest 20 to 30 percent of unmarried people.
For the remaining people, it concludes that it makes more financial sense to go without and incur the risk of a financial spenddown for Medicaid. If a person needs care under this concept, it finds that the person is better off spending down assets and then letting Medicaid pay the bill than using up necessary funds for long-term care insurance.
The study claims that patients in a nursing home stay dramatically longer, on average when measuring their length of stays by month instead of by year. However, the study does not appear to differentiate between rehabilitative stays (which are often short) and custodial stays (which tend to be longer). Because rehabilitative stays are often covered by Medicare and or a combination of Medicare and private health insurance, the cost of those stays are not included in most long-term care insurance plan coverage periods.
“Medicaid and Medicaid planning has never been a replacement long-term care insurance,” said Mike Anthony, JD, CMP™, Chairman of the CMP™ Governing Board. He continued, “Good long-term care insurance is often the best first line of defense to the high costs of long-term care because it can help pay for home care, assisted living and nursing home care without the need to deplete assets. While policies have become more expensive in recent years many of the financial service companies have developed hybrid investments with enhanced payouts for long-term care if the person needs it.”
High premium costs and strict underwriting have led to a decline in long-term care insurance ownership and have put many companies financially at risk for providing the insurance because of billowing costs (See: Long-term care insurance takes another hit). The lack of long-term care insurance coverage and growing senior population has led to a greater number of people needing help navigating the long-term care Medicaid program.