Long-term care insurance. Premium estimates for prototype policies

Area of Science:

• Health Economics
• Insurance Studies
• Gerontology

Background:

• Medicaid budgets face increasing strain due to the long-term care needs of the elderly population.
• Private long-term care insurance is proposed as a potential solution to alleviate this financial burden.

Purpose of the Study:

• To provide premium estimates for various prototype long-term care insurance policies.
• To analyze the impact of different policy specifications on premium costs.

Main Methods:

• Examined alternative specifications including services covered, daily benefit amounts, waiting periods, coverage duration, age at purchase, administrative costs, risk selection, and tax treatments.
• Developed premium estimates based on these varied policy parameters.

Main Results:

• Generated premium estimates for diverse long-term care insurance policy designs.
• Quantified the general order of magnitude for premiums under different assumptions.

Conclusions:

• The premium estimates offer valuable insights for understanding the cost of various long-term care insurance policies.
• These estimates can guide insurers in setting initial rates for new policy types or when actual data is unavailable.