Long-Term Care Insurance Benefits Paid $13.25 Billion to Policyholders in 2022
Aging in America is having serious consequences for families and finances. As people age, they may become more prone to physical decline, chronic illness, dementia, and frailty.
With so many people needing long-term health care, the costs are rising rapidly. Traditional health insurance, including Medicare (and supplements will not pay for most long-term health care, but Long-Term Care Insurance will pay for these services.
These insurance policies are paying huge benefits providing the funds to pay for quality care services, including home care. According to data from the American Association for Long-Term Care Insurance (AALTCI), the top insurance companies paid a record $13.25 Billion in benefits to Americans to pay for their care in 2022.
Jesse Slome, the executive director of the AALTCI, says this surpasses the $12.3 Billion paid in Long-Term Care Insurance benefits in 2021. For the calendar year 2018, the Association reported that insurers paid out $10.3 Billion in LTC Insurance benefits.
The increase in benefit payouts is expected as policyholders age and start to require care.
According to Slome, insurance companies paid much more in benefits than the stated amount since the AALTCI report covers only traditional Long-Term Care Insurance. While there are more traditional plans than linked benefit plans, Hybrid and other policies that combine life insurance or annuities with long-term care benefits are paying out benefits, increasing the overall total.
Types Of Long-Term Care Insurance Policies & Which Is Best For You
Data for linked-benefit policies is harder to calculate because there are so many different variations of these policies.
Year | Benefits Paid Out |
|---|---|
2018 | $10.3 Billion |
2019 | $11 Billion |
2020 | $11.68 Billion |
2021 | $12.3 Billion |
2022 | $13.25 Billion |
One of the primary benefits of Long-Term Care Insurance is that it can reduce or eliminate out-of-pocket costs associated with long-term care services. These guaranteed tax-free benefits allow individuals to access quality care without worrying about the financial burden of these services.
Long-Term Care Costs Growing
Paying for these services out of pocket can be extremely expensive, putting a significant strain on an individual's finances. The cost of long-term health care has been exploding nationwide and is expected to increase in the years and decades ahead.
Nursing homes are the most costly and run well over $100,000 annually. The good news is most long-term health care is delivered at home or in assisted living, according to Slome.
The LTC NEWS Cost of Care Calculator shows how these costs are expected to increase in the decades ahead. The calculator illustrates the median cost of all types of long-term care services in major marketing areas in each state.
LTC NEWS Cost of Care Calculator - Find Your Location
Long-Term Care Insurance benefits are mostly paid to individuals who receive benefits for qualifying care in their own home or in an assisted living facility. Benefits also are paid when policyholders require care in skilled nursing home settings.
The AALTCI data is gathered and corroborated with leading industry actuaries, including historical average annual growth rates from the last ten years from companies' year-end reporting data.
LTC Policies are Comprehensive
When faced with long-term health care needs, LTC Insurance can provide benefits that make it easier to access quality care. Benefits may include coverage for home health aides, adult day services, home modifications, and facility options like assisted living, memory care, or nursing homes.
Policyholders and their families decide the type of care they prefer once the policyholder qualifies for benefits. Depending on the policy, benefits may also be used to purchase items such as durable medical equipment and medical alert systems that help care recipients stay in their homes.
Long-term health care is much more than just a financial issue. In many cases, family members such as daughters or daughters-in-law may take on the caregiver role, which can be taxing both physically and emotionally. Long-Term Care Insurance eases the burden for families so that they can spend more quality time together and less time acting as caregivers.
Family Members Need Time
By providing access to professional, quality care, Long-Term Care Insurance gives families have the time to be family. Caregiving can be embarrassing for both the caregiver and the care recipient.
Even though Long-Term Care Insurance is very successful at paying benefits, giving the policyholder access to quality care, and reducing family stress, many people ignore the problem. Some experts have suggested some people are in denial of the realities of aging. Others say that Long-Term Care Insurance is too expensive. But is it too expensive?
Is LTC Insurance Affordable?
There is no question some people should not buy LTC Insurance since Medicaid will pay for these services for those with little or no income and assets.
The wealthy often take advantage of the tax benefits and services LTC Insurance offers. Everyone else? Can they afford Long-Term Care Insurance?
The answer is subjective, but often many people find Long-Term Care Insurance to be a very affordable way to protect their 401(k) and reduce the burdens placed on their families.
Premiums are based on several factors, including age, health, family history, and the policy's total benefits. LTC Insurance is custom-designed, and premiums vary dramatically between insurance companies.
How Much Does Long-Term Care Insurance Cost?
Given the likelihood of someone needing long-term health care at some point in their lifetime, this can be a bargain if you get a policy before you retire and still enjoy good health.
Get Professional Help with Planning
Seek professional help when getting coverage. Long-Term Care Insurance specialists who represent the top carriers can help you find affordable coverage based on your specific situation. Underwriting rules differ between insurance companies as well. You might not be insurable with one company, but another company would have no problem offering you coverage.
What Is Underwriting In Long-Term Care Insurance?
Seek a specialist who represents the top insurance companies instead of one or two. The specialist should have a strong background in underwriting, policy design, and claims. Plus, just because a specialist calls themselves a specialist doesn't make them one. Many specialists have helped hundreds, even thousands of people in their careers, including assisting policyholders at the time of claim. That experience is highly beneficial.
A specialist will match your age, health, and other factors to provide accurate quotes from the top companies in the industry.
The only good Long-Term Care Insurance policy would be the one you have when you need benefits. The policies are doing what they are supposed to do, pay benefits, provide access to quality care, and reduce family burden. Yes, $13.25 Billion is a considerable number, but those numbers will increase, and people will get older and receive more benefits from their Long-Term Care Insurance.
Most people get coverage in their 50s.