The American Association for Long Term Care Insurance reported earlier this year that the nation’s long-term care insurance companies paid a record $7.85 billion in claim benefits to 250,000 individuals in 2014 according to a just-released report.“Total long term care insurance benefit payments increased by five percent from $7.5 billion paid the prior year,” reports Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI), the national trade group. The organization reported that insurers paid $6.6 billion to some 264,000 policyholders in 2012.
“Americans are living longer and the consequence is more people needing long-term care,” Slome explains. ”Contrary to what most people think, the vast majority of long-term care insurance pays for care in the home or in assisted living communities, not in skilled nursing homes.” According to AALTCI research, half of all newly opened long-term care insurance claims paid for care in the home. “Consider long-term care insurance as nursing home avoidance protection,” Slome adds.
So when I say it “works,” I mean it pays the benefits that policyholders purchased at the time when they most need it. Of course the press usually only wants to write about claims that did not get paid, but it is hard to argue with $7.5 billion paid out to those in need. It is important to note, that it is almost impossible to design the perfect long-term care insurance plan as virtually none of those who received part of the $7.5 billion probably did not have the perfect plan, but I do know that they and their families are very happy they did some advanced planning for their long-term care needs. I am also pretty sure that none of them sent any of the money back to the insurance company because of bad plan design. It’s time to plan or at least inquire about a plan that may be appropriate for your unique situation as the insurance does work when it is needed.