Why Long-Term Care Insurance Isn’t the Answer

Long-term care insurance may actually be a lot less needed than past research suggests. That’s because while nursing home stays are frequent among the aging population, they’re relatively short, compared to other forms of long-term living.

Such are the findings of a new study from Boston College’s Center for Retirement Research, that delves into the reasons people purchase long-term care insurance, and how much they actually need it.

The findings undercut the rationale that nursing home care is expensive, at about $81,000 per year, on average, by showing the average length of stay, at around 11 months total for the average man, and 17 months for the average woman.


“The significance is that nursing home stays are higher-probability, lower-cost events than previously thought, which reduces the appeal of purchasing long-term care insurance,” the Center writes of the study. “This finding helps to explain why so few older Americans – 13% – buy the coverage to protect their financial assets from potentially being drained by nursing home bills.”

Boston College’s Center for Retirement Research finds that long term care insurance is only optimal for about 20% to 30% of single individuals, versus the 30% to 40% figures that past research finds should purchase the insurance. In part, the discrepancy between those who should purchase it and those who actually do is due to common knowledge that Medicare pays for nursing home stays for those who can’t afford to pay for the care themselves. But, the researchers say, fewer people may benefit from insurance than previously estimated.

“Previous models of care usage appear to understate the risk of going into care and overstate the duration of care for those who require it,” the study’s authors write in their executive findings.


View the study.

Written by Elizabeth Ecker

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