Abstract:

More than half of the 31 million Americans over the age of 65 will need long-term-care (LTC) services, but very few of them have adequate LTC financial plans. Medicaid was established in the 1960s to help the poor and, later on, the middle class who cannot pay for their own medical expenses. Aside from Medicaid, another option for financing elder care is becoming a member of the Continuing Care Retirement Community or of other housing or hospital programs. About 2.4 million elderly Americans have chosen to purchase long-term-care insurance (LTCI) policies to fund LTC services. Most people buy LTCI in the hope that premium costs will be considerably less than the cost of LTC services that may be required in the future. LTCI is also cheaper than private medical insurance. The design standard provisions, terms and provisions, and taxation of LTCI are discussed. Other LTC funding strategies are also described.