Long-term care (LTC) is associated with the elderly for good reason. Over the past 50 years, life expectancy has increased significantly and is therefore something all families should be prepared to address. Even though we may live to a ripe old age, that doesn't mean we will be healthy or able to live independently. Most people develop one or more chronic conditions that require living assistance – and many live with that ailment for years. Conditions such as arthritis, joint and muscle deterioration, or back pain often lead to chronic disability, making it difficult to impossible to take care of your own physical and lifestyle needs. Among even healthy seniors, about half of people age 80 and older experience some form of dementia or cognitive impairment.
Most LTC insurance (LTCi) contracts require that a policy owner seeking LTC no longer be able to perform at least two of the basic activities of daily living (ADL), which include dressing, bathing, toileting, feeding, and moving without assistance. However, before getting to that stage, many people may live for years needing help with domestic ADLs, such as preparing meals, paying bills, shopping, attending appointments, etc.
New Criteria for LTC Insurance
An unfortunate influence of the pandemic is that some LTC insurance carriers now require an in-person medical exam as part of the application process. In the past, underwriting generally involved a telephone interview, a completed questionnaire, and a medical records review. These days, in addition to an exam, issuers have increased the number of pre-existing conditions that are excluded from coverage. Furthermore, insurers are declining more applications for medical reasons. There is preliminary data that suggests more LTCi applications are declined, or higher premiums are charged, in geographical areas where populations have persistently higher rates of serious COVID-19 infections. Not surprisingly, these areas are generally correlated with lower vaccine rates.
 
New Policy Options
Even before the pandemic, LTCi sales were on the decline, and many insurers had exited the market. This is because, with longer life expectancies, carriers increased premiums to cover the financial risk. This priced many policies out of range for most households. In recent years, the life insurance industry has found a strong market in sales of hybrid policies, which guarantee benefits one way or another. For example, a contract might include a rider that allows the policy owner to use the future death benefit in the present to pay for LTC expenses while she is still alive. If she doesn't need the money, her beneficiaries will receive the value when she dies. Another benefit of hybrid policies is that they guarantee premiums will not increase. In many cases, a policy can be purchased with a single lump sum.
 
New Focus for LTC: Live at Home
Apart from exploring new ways to pay for long-term care, there is political interest in finding ways to provide LTC more efficiently than in the past. For perspective, consider that the current U.S. system of placing Medicaid recipients in nursing home facilities proved to be one of the most vulnerable components of the pandemic. As of February 2021, more than 170,000 residents in long-term care facilities had died due to the coronavirus.
 
Various public agencies and non-government organizations (NGOs) are looking at new paradigms for caregiving as an alternative to high-volume residencies to minimize the risk of disease contagion. Some recent proposals include the following:
 
- Enhance current public programs that support independent living [e.g., Original Medicare, Medicare Advantage (MA) plans, and Special Needs Plans (SNPs)] with integrated benefits such as wellness care, behavioral healthcare, case management, home-delivered meals, transportation, and adult daycare services.
- Allow Medicaid’s long-term services and supports (LTSS) programs to reimburse long-term care expenses at home and for community-based services.
- Expand efforts already originated in a handful of states (e.g., Illinois, Michigan, Minnesota, Washington) for state-sponsored, long-term care insurance plans.
- Consider building on state initiatives such as California’s Master Plan for Aging, which includes plans to:
- Create community housing solutions that are age-, disability- and dementia-friendly, as well as climate- and disaster-prepared.
- Improve the quality of life for the elderly and disabled by presenting opportunities for work, volunteering, engagement, and leadership regardless of age or disability. The purpose of this initiative is to reduce isolation, discrimination, abuse, neglect, and exploitation.
- Generate up to 1 million highly-qualified, well-paid caregiving jobs.
- Improve financial security for the elderly population by making long-term care affordable.
- Reimagine nursing homes using a continuum of care housing model designed for 8 to 10 residents with integrated staffing.
 
The current trend in the caregiving industry is to help seniors be able to live at home for as long as possible. In many cases, this increases the burden on families. Since some people have to leave the workforce to care for family members, this hampers economic growth and tax revenues that could be used to fund better options. While LTC insurance remains expensive, potential buyers must be aware that most policies pay out benefits regardless of where care is bestowed, including nursing homes, assisted living facilities, the insured's home, or even the home of the insured’s family member.
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