New vehicle for long-term care planning

With the UK debate on long term care insurance getting bogged down in political rhetoric, it is useful to see how it is going to be dealt with as part of the American reform of healthcare.

US health reform includes a new insurance programme for long-term care. Starting next year, workers can set aside money from their paychecks to pay for services and support that many will need in their old age or if they become disabled.

The new system is meant to help offset the high costs of home-based care, assisted-living facilities and nursing homes, which mostly come out of people’s savings. It is voluntary, but workers who do not want to participate have to opt out. People who stay enrolled will receive an average cash benefit of no less than $50 a day when they need it, as long as they have paid into the programme for at least five years.

The new public programme is unlikely to displace the private long-term care insurance industry, at least in the short term. But if it is successful, that may change.

In the UK, LTC insurance is close to extinction.

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