For months now I’ve been hearing that the long term care insurance industry is shrinking.
Insurance (Photo credit: Alan Cleaver)
Although long term care insurance is billed as a must-have to help protect senior citizens pay for extended care services, such as nursing home treatment , in-home care and assisted living facilities, consumers just aren’t buying the polices. Those people with polices aren’t cancelling as the industry expected, either. That’s probably because they bought the polices when premiums were very low and have great coverage that may include lifetime benefits. The result is that insurers haven’t been able to pocket the premiums or the interest income they had hoped for because of historically low interest rates. So many insurers are pulling out of the market, while those that remain are raising premiums and cutting benefits.
I don’t see how that can be good for nursing homes or the assisted living industry. Nursing homes may not be as hard hit by insurers’ decision to abandon the long-term care market or cut benefits. Residents who need nursing home care may still qualify for Medicare and Medicaid coverage.
But residents who choose assisted living are paying for a living arrangement that caters to their needs in their senior years, offering the elderly their own space. Assisted living is offered in a variety of forms. Residents may chose a single room, small house, condo or apartment. But those are out-of-pocket expenses that residents are responsible for, unless they have medical needs that activate their long-term care insurance policies for care in this type of living arrangement.
This year, monthly rental fees for assisted living units ranged from $600 a month to $7,900. Currently, the average cost of assisted living in the U.S. is about $3,400 a month for a single bedroom, single occupancy unit. That does not include the cost of help with some daily living activities such as bathing, feeding, dressing, or preparing medications.
Those costs shut many seniors out of the assisted living market. With fewer insurers in the market, higher premiums and less generous coverage, I expect that many more seniors will not be able to afford to live in an assisted living community.
So one has to wonder if assisted living communities aren’t in store for some downsizing. Residents should remember that assisted living facilities are businesses which are dependent on the housing market and getting tenants as much as they are dependent on seniors and people with disabilities who need medical care. The sub prime mortgage crisis that sent housing prices tumbling around 2007 led some assisted living and senior housing communities to file bankruptcy. Residents who paid a lump sum upfront for their units and care lost their investments.
A decline in long-term care insurance coverage may be the next big solvency test for the assisted living industry.
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I'm a working wife and mom who takes care of an aging parent. Only I began doing it full-time, in my home, when I was in my mid-thirties, single and about to make a career change. Thirteen years later, mom is still living with me and I expect it to be that way until one of us leaves this earth. It hasn't always been easy managing her care. (I've helped my mother recover from surgery, and a major injury that required a nursing home stay, as well as the death of my younger brother after a long illness.) But caring for her has been worth it because I know that my assistance means she enjoys a better quality of life as she ages. I hope the experiences and information that I share will help you manage,with grace, the changes that take place in your life as you assume the responsibility of being your parent's caregiver. If you have a question you think I can answer, please contact me at Cynthia@motherskeeper.com
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