Friday, August 24, 2007

Long Term Care Insurance: Overview

One of the most important strategies for answering the questions about filial responsibility (and personal responsibility) is going to be long term care insurance. This started to get offered and discussed in insurance circles in the late 1990s. Obviously, from an actuarial point of view (with out concept of personal “moral hazard”), individuals who are advanced in age or in poor health would not be able to purchase such insurance at a reasonable price. Younger people, and especially people starting their working careers, have the opportunity to consider purchasing it over a lifetime when it could be cheap in the beginning. Of course, this gets added on to other expenses faced by young adults, such as college loans, and ordinary health insurance. One possible direction of this issue is to expect working adults to manage this issue for their parents.

In fact, I think that health care reform, however the debate evolves (especially in the 2008 presidential election, where the Democrats (most of all Hillary Clinton) will talk about universal coverage, and Republicans will talk about tax exclusions or credits to pay for premiums, and where some states like Massachusetts and California implement some kind of mandatory health insurance), needs to embrace long term care insurance. Even Canada and Britain, so extolled by Michael Moore as paradigms of virtue in providing universal health insurance, are facing the same problem with custodial nursing home and assisted living care. Lower population replacement (among resident populations) and the need to extend the work career (demanding changes in behavior by employers) are also factors.

It’s important to note that Health Reimbursement Accounts (HRA’s) managed by employers already allow tax deferrals for LTC premiums. Visit this link at ING: It’s likely that conservative lawmakers will try to propose more tax deferrals to help with caregiving and long term care issues, as already there are deferrals for some childcare and eldercare situations. (But remember, the Family and Medical Leave Act only authorizes unpaid leave for caregiving situations and has been criticized in comparison to European practices.)

The federal government (and US Military) have a well-organized web presence on this issue for its own employees. Check the OPM website here for Federal Long Term Care Insurance Programs (FLTCIP). Link.

The Web is quickly developing a large repository of sites from companies entering the business. One can search. One site that looks interesting is Mr. Long Term Care:

Over time, I expect to add more details on this subject on this blog, in connection with the concern over filial responsibility laws (see the last several postings back to July 7).

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