Long-Term Services and Supports for Older Americans: Risks and Financing

Long-term care services and supports (LTSS) includes a range of services and supports individuals may need to meet their health or personal needs over a long period of time.1 Most LTSS is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called “Activities of Daily Living” (or ADLs) which include such everyday tasks as bathing, dressing, toileting and eating (Doty & Shipley, 2012).2 Many Americans prefer not to think about this need for assistance or who will provide it. They underestimate how likely it is they will need it and how much it will cost (Wiener et al., 2015; Kane, 2013; Tompson et al., 2013). Even if they correctly consider the chances of becoming disabled and needing daily help, many Americans mistakenly assume their health insurance covers these costs. However, health insurance does not cover LTSS costs, and Medicare, the major public insurance program for older Americans, does not cover most LTSS expenses (Centers for Medicare & Medicaid Services, 2015).3

While Medicaid provides LTSS to those with chronic disabling conditions (Komisar, 2013; Tompson et al., 2013),4 it is only available for individuals who meet income and other eligibility requirements (U.S. Department of Health & Human Services, 2015). A private market for LTSS insurance exists, but less than 8 percent of Americans have purchased it (Freundlich, 2014), in part due to high and rising premiums, and exit of insurers from the market (Scism, 2015). Sales figures from recent years suggest there has been stagnation, or even decline, in the market (Cohen, 2014). For some, the costs of LTSS are likely to outstrip retirement savings. Researchers at the Employee Benefit Research Institute found that projected LTSS expenses greatly contributed to projections of retirement deficits (VanDerhei, 2015).

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