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Long Term Care Insurance in the Aging Marketplace - Changes are everchanging

In this week’s email:

• Today’s Insight from AgingHere

• A Deep Dive into the Leading Long-Term Care Insurance Providers of 2023

• Uninsured in 2023? Not All States Are Penalty-Free: The Remaining Mandates Explained

• Navigating the Health Insurance Maze: Your Guide to Mid-Year Coverage Loss

• Medicaid's Implicit Tax, The Hidden Barrier to U.S. Long-Term Care Insurance Growth

• Today’s AgingHere Survey

• Making us laugh this week

• AgingHere Referral Program

• Today’s Sponsor: Mastering Medicare Podcast (MasteringMedicare.net)

Today’s Insight from AgingHere

In the rapidly evolving healthcare landscape of 2023, long-term care insurance emerges as an indispensable pillar. Government data uncovers a disconcerting fact: while a significant 70% of individuals past the age of 65 will inevitably require sustained care as they age, a scant one-third of those in their early 50s are financially equipped for this looming reality. This underpreparedness gains prominence against the backdrop of spiraling healthcare costs associated with aging, from everyday necessities to specialized treatments for conditions like Alzheimer's. Leading the charge in the realm of long-term care insurance are industry giants such as Nationwide, renowned for its tailored policies; Mutual of Omaha, recognized for its exceptional stand-alone LTC insurance; New York Life and Northwestern Mutual, both heralded for their robust financial stability; and GoldenCare Insurance, an invaluable platform for juxtaposing various providers. Yet, it's imperative to note that while these institutions offer refuge, general health insurance often falls short in covering the multifaceted costs of long-term care, accentuating the indispensable role of these specialized policies.

However, as the horizon of healthcare insurance expands, complexities ensue. The legacy of the Affordable Care Act (ACA) looms large, even as penalties at the federal level for the uninsured have been dismantled post-2018. Still, states like Massachusetts, New Jersey, California, Rhode Island, and Washington, DC remain resolute in imposing sanctions on the uninsured, unless specific exemptions are met. The ACA, notwithstanding the cessation of its individual mandate penalty, commands widespread support, reinforced by repeated endorsements from the Supreme Court. The ACA's vitality is further reflected in the uptick of insurance enrollments, hitting unprecedented numbers in 2023, propelled by the American Rescue Plan's enhanced premium subsidies. Concurrently, the turbulent waters of New York's long-term care insurance market offer cautionary tales of past pricing miscalculations leading to significant insurer losses. Adding another layer of complexity is Medicaid, casting a dominant shadow with its "implicit tax", potentially curtailing the growth trajectory of private long-term care insurance. The interplay of these multifarious elements underscores the urgency for astute policy recalibrations, ensuring that the healthcare infrastructure remains robust and resilient for future generations.

A Deep Dive into the Leading Long-Term Care Insurance Providers of 2023

Long-term care insurance is crucial for healthcare planning, especially since government data shows that 70% of individuals over 65 will need ongoing care later in life, yet less than a third of those over 50 are financially prepared for it. Such insurance covers expenses related to age-associated care, including everyday assistance and specialized care for diseases like Alzheimer's. Essential features of the best long-term care policies include flexible benefits, efficient customer service, and a simplified claims process. Top recommended companies for long-term care insurance are Nationwide, known for policy customization; Mutual of Omaha, notable for stand-alone LTC insurance; New York Life, lauded for its financial stability; Northwestern Mutual, which closely follows for financial stability; and GoldenCare Insurance, ideal for comparing various providers. Regular health insurances often don't cover long-term care costs, making specialized policies essential. read more.

Uninsured in 2023? Not All States Are Penalty-Free: The Remaining Mandates Explained

The Affordable Care Act (ACA) once required Americans to maintain health insurance coverage or face a penalty, which was eliminated at the federal level after 2018. However, as of 2023, five jurisdictions—Massachusetts, New Jersey, California, Rhode Island, and Washington, DC—still impose penalties for being uninsured, unless individuals qualify for an exemption. Although the ACA's individual mandate penalty was removed, the ACA itself remains supported by most Americans, with its provisions upheld by the Supreme Court multiple times. Despite the removal of the federal penalty, insurance enrollment through exchanges has increased in recent years, reaching record highs by 2023, driven in part by enhanced ACA premium subsidies introduced by the American Rescue Plan. Although many states no longer penalize the uninsured, continuous health insurance coverage remains crucial, as obtaining coverage outside of designated enrollment periods is generally restricted. read more.

Long Term Care Insurance instability has led to many changes in the marketplace

The cost of long-term care services is alarmingly high, with average yearly nursing home care in New York priced at about $159,000 per person and in-home care costing approximately $66,000. As a result, Americans paid an astounding $55 billion out-of-pocket in 2018, with Medicaid contributing three times that amount. As the U.S. population grows older, the financial burden is predicted to escalate, possibly accounting for 3% of the U.S. GDP by 2050. To mitigate these costs, some Americans have turned to long-term care insurance (LTC insurance). However, the LTC insurance market in New York has seen a decline, with policyholders decreasing by half since its peak in 2002. This decline is largely due to initial pricing errors, where policies were offered at unrealistically low premiums due to a lack of historical data on long-term care costs. Consequently, insurers incurred substantial losses, leading many to exit the market or face financial challenges. Initial rate increase requests to address the mispricing were often denied or only partially approved, exacerbating the market's instability. Despite its current struggles, the importance of understanding and addressing the LTC insurance market's challenges is evident given the looming costs of elder care in the U.S. read more.

Medicaid's Implicit Tax, The Hidden Barrier to U.S. Long-Term Care Insurance Growth

The U.S. spent $135 billion on long-term care in 2004, a figure expected to triple by 2040 due to an aging population and rising healthcare costs. Despite the high expenses associated with long-term care, only 10% of the elderly have private insurance for it. NBER researchers, Jeffrey Brown and Amy Finkelstein, investigated the small market for private long-term care insurance. They found supply side market failures, such as high pricing and limited benefits, but these weren't the main reasons for the limited market. The presence of Medicaid, which covers long-term care expenditures after other resources are exhausted, disincentivizes private insurance. Medicaid effectively imposes an "implicit tax" on private insurance benefits and doesn't effectively protect financial assets, making it a poor substitute. Policy changes reducing Medicaid's implicit tax could stimulate the private market. read more.

Making us laugh this week:

AgingHere Referral Program

Today’s Sponsor: Mastering Medicare (MasteringMedicare.net)

Listen to Mastering Medicare Podcast Episode 23: Medicare broker deep dive - interview with Matt Gibson from 90 Days From Retirement

AgingHere Inspirational Quotes

In the journey of life, the care we provide to our elderly is the greatest reflection of our humanity and the legacy we leave behind.