The Pitfalls of Long-Term Care Insurance

The private insurance market for long-term care has failed to provide financial security for millions of older Americans, as insurers underestimated the number of policyholders who would use their coverage, how long they would live, and the actual cost of care. Only 3 to 4 percent of Americans 50 and older have long-term care insurance, despite federal estimates that 70 percent of people 65 and older will need critical services before they die. Insurers have raised premiums, narrowed the eligible pool of clients, and stopped selling stand-alone policies altogether. Many policyholders face difficult choices of paying more, reducing benefits, or dropping coverage. Experts argue that a government-subsidized or public program is needed to address the growing burden of long-term care costs.