Jumpstarting the Debate Over Public Long-Term Care Insurance – Howard Gleckman

Rep Tom Suozzi (D-NY) has introduced a bill to create a public, catastrophic, long-term care insurance program. The monthly cash benefit, initially about $3,600 and indexed for inflation, would be funded with a modest increase in the payroll tax of 0.3 percent for workers and 0.3 percent for employers, or roughly $300-a-year for a median wage worker.

Source: Jumpstarting the Debate Over Public Long-Term Care Insurance – Howard Gleckman

A LTC benefit equal to $43,200 per year funded by only 6/10 percent payroll tax? Good luck with that. There is a reason why many insurance companies want you to drop your LTC insurance and are raising premiums rapidly. Mine went up 46% last year and 26% this year. That’s because the insurance risk is too high to be affordable.

And then there is this; higher payroll taxes for a new liability before we have resolved the solvency of Social Security and Medicare. It will take a lot more than 3/10 percent to make Social Security sustainable.

5 comments

  1. See the (no) CLASS Act, part of 2010 Health Reform Act – look it up.

    I wanna buy your vote (with other people’s money). The is rehashed crap from Ted Kennedy, when he wasn’t driving cars off of bridges killing his passenger.

    And, don’t forget the current litigation over the LTC program mandated in Washington state.

    Stupid, Stupid, Stupid.

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  2. Great. Another “benefit” that won’t cover costs. And if it won’t cover current costs, who cares about it being indexed for inflation? And medical costs tend to go up more than inflation anyway.

    Oh, that’s right; 2022 is a congressional election year…

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  3. I purchased LTC over 20 years ago and as you stated the premium increases are making it prohibitive to keep on a fixed budget.
    What do I do now after paying in all these years?
    I wish there was a government program in place ….hopefully it would be more affordable for all to buy into.

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    1. Had a similar situation. Bought a MetLife policy and paid in for a number of years. “Cancelled” the coverage by ceasing to make premium payments. A portion of your benefit may be Nonforfeitable – probably depending on your policy. My MetLife policy has a modest level of “Nonforfeitable Coverage” equal to (a) the sum of all previously Paid Contributions or, if greater, 30 days of the Daily Benefit Amount. So, for me, if I ultimately qualify, I’ll get my contributions back without interest.

      Important to remember that the insurance companies are counting on policy cancellation – which lowers the cost of coverage and provides profit margin – they call it the lapse rate. And, one of the challenges in the LTC industry was that insurance companies sometimes overstated lapse rates.

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  4. And the parade of benefits continues. Always at promised low cost initially but long term expense is unknowable. How many of these schemes can be dreamed up before the parade ends? I am waiting for all the clowns to pop out of the little car.

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