Purchasing of Long-Term Care Insurance Must be a Viable Option for Pennsylvanians

HARRISBURG — Pennsylvania has a lot at stake when it comes to issues affecting older residents. We are among the nation’s oldest and most rapidly aging states. Our commonwealth ranks third nationally by percentage of population age 65 or older, behind Florida and West Virginia. About 2 million of our 12 million residents are age 65 or older, today.

Much has been written about the wave of 80 million baby boomers that began turning 65 in 2011. An estimated 3.4 million of these baby boomers live in Pennsylvania — almost 5 percent of our nation’s total. This age wave is ‘personal’ to all of us, as many of us are either boomers ourselves, or have parents or grandparents who will soon need long-term care. By the time we get to 2050, one in four Pennsylvanians are projected to be over age 65 and potentially need long-term care.

Unless individuals, families and both the state and federal governments plan ahead, or come up with clear solutions, the baby boomer tsunami will continue to challenge public and private insurers and the long-term care insurance market.

“No one likes to think about getting older, facing chronic illness or becoming too frail to safely live on our own. But it happens, and when it does, more and more seniors and their families are finding themselves unprepared,” W. Russell McDaid, PHCA President and CEO said in testimony before the Pennsylvania Department of Insurance. “Data show that only 35 percent of people 65 or older think they will need long-term care in the future, whereas 70 percent of those turning 65 this year will eventually require some form of long-term care. Despite these facts, few people have insurance coverage against the high cost of their long-term care.”

State governments alone cannot solve all of the problems of financing long-term care that exist today. Pennsylvania’s Medicaid program can and should do its part, but the current growth curve for the State’s Medicaid program is not sustainable. Private sector insurance coverage must be part of the solution.

“Clearly, individuals should carry a part of the responsibility for financing their own long-term care whenever possible, and long-term care insurance is one way to do this,” said McDaid. “However, as rates for long-term care insurance skyrocket and benefits fall short of expectations, consumers are far less likely to view long-term care insurance as a viable option to meet their long-term care needs. But there are ways for the state and federal government to assist consumers by making the purchasing of long-term care insurance a more viable option beyond keeping the rates affordable.”

In his testimony, McDaid offered several ways for state and federal government to assist consumers by making the purchasing of long-term care insurance a more viable option beyond keeping the rates affordable, including the passage of legislation that would allow people to deduct the purchase of long-term care insurance “above-the-line” on their state tax forms — that is, deduct it directly from their total income before taxes, thereby decreasing their tax bill in most cases.

McDaid concluded by noting that “Government must continue to play a prominent role, but new government programs are not the solution–government can’t afford to take on much more.”

Testimony is available on the PHCA website at https://www.phca.org/advocacy/issue-brief-testimony/.