The History and Need For Long-Term Care Insurance
What is known as traditional long-term care insurance sprang up in the late 1970s to meet the needs of the “Greatest Generation.”
What most people don’t realize is—the need, the roots and the causes for long-term care insurance really started in the early to mid 20th century when societal norms and demographic shifts began to take place.
The two main driving factors were:
Rising Taxes and Consumer Debt: In 1913, Congress created a two-headed monster. They established or allowed the establishment of the Federal Reserve, while at the same time they ratified the 16th Amendment and that gave Congress the “power to lay and collect taxes on incomes, from whatever source derived.”
Add in the rise of easy credit and all of sudden, one income could no longer provide for the needs of an American family.
World War II: During World War II, many men headed off to war and that forced many woman to head off to work outside of their home. It’s not that woman didn’t work outside the home prior to World War II, they did, just not as many. (Source: https://www.archives.gov/education/lessons/wwii-women.html)
After World War II was over, many of the women never returned home full-time. Some, because they enjoyed working outside of the home. For the rest, it was simply a financial necessity.
Now, you may be asking, “what does this have to do with long-term care insurance?”
Simple: Up until this time, many Americans lived in multi-generational homes. It was not uncommon to have three generations under one roof. Children, parents and grand-parents. When wife and mom went off to work full-time, there was no longer an adult to help take care of an aging parent.
With no adult at home to take care of an aging parent, the need for nursing homes and assisted living facilities came into being during the 1960’s.
Then in the late 1970’s to meet the need of paying for care in a nursing home or assisted living facility, long-term care insurance was invented. And there you have it.
What Does The Future Hold For Long-Term Care?
Going forward, we will likely continue to see more or more people opting for the hybrid LTC plans…be it tied to a life insurance policy or an annuity.
Younger Boomers and Gen X individuals that are concerned about future long-term care needs and how to fund them, should be doing everything they can right now to maximize their savings and investing prior to retirement. The more you can save and accrue prior to retirement, the easier it will be to either fund a LTC policy or, if fortunate enough, to have the funds to cover any future long-term care needs without compromising your retirement lifestyle and basic financial needs.
These groups (and others) should and could consider investing in real estate to help fund their future long-term care costs. When you have tenants paying off your mortgage, even if you break even on a monthly basis, over time, you will have a home fully paid for that can be sold or leveraged to cover either a long-term care insurance policy or a long-term care need.
Woe, Woe, Woe Are The Unprepared!
Those that aren’t prepared for any future long-term care need and end up with one will be at the mercy of either family or Medicaid.
Presently, there are about 46 million people in the US who are 65 and older. By 2050, that number is expected to grow and double to nearly 90 million (https://www.ruralhealthinfo.org/toolkits/aging/1/demographics). There are some serious questions to consider and answer with this onslaught of an aging population:
- With more people on Medicare, how will that affect future Medicare premiums people pay while working and then in retirement?
- For those that end up on government assistance from Medicaid:
- What will that coverage look like?
- How will the state governments fund it? Increased taxes?
- And where in the world will all those people stay? There simply aren’t enough nursing homes and assisted living facilities available. Presently, about 1.5 million people live in one of the estimated 15,600 nursing homes in the United States. With the 65 and over population doubling in the next 25-30 years—that means there needs to be a lot nursing homes built or expanded…has that even been considered by most communities, states and healthcare organizations?
- How can families and churches better prepare for the future where elderly family and church members will get the care and coverage they need?
