• Social Security as LTC vehicle

    Howard Gleckman continues to look for ways that we might finance long term care in the wake of the demise of CLASS, and given that the default system seems to be liked by no one. He links to an idea from Yung-Ping Chen, professor emeritus of gerontology at the University of Massachusetts

    He’d let Social Security recipients trade off a small portion of their cash benefit in return for basic long-term care insurance. They could, for instance, give up 5 percent of their monthly check in exchange for enough insurance to pay for, say, a year of nursing home care or two years of home care, Chen figures.

    Gleckman points out this would mimic a trend in the private market for combination life insurance/long term care policies in which a portion of the death benefit can be taken in the form of payment for LTC. He notes another route: Social Security could be reformed in a way that indirectly supports LTC by increasing income later in life:

    Congress might adjust benefits so retirees get a smaller payout at first but bigger checks after, say, age 80 or 85. This would not be long-term care insurance per se, but would boost people’s income at the time they’d be most likely to need costly personal care. Again, some annuities work this way today.

    This is reminiscent of Jed Graham’s old age risk sharing concept, which doesn’t discuss long term care but addresses the worry of outliving ones private assets and proposes lower Social Security benefits at younger ages that increase as a beneficiary ages, thus providing more money when the need for LTC is higher. And while we are throwing around ideas, I would add one I have been interested in, private accounts that could be implemented via pay roll taxes that would essentially produce increased savings that young adults could use for their parents’ LTC, or their own needs.

    All of the notions above are ideas, and not detailed plans. Here are some past thoughts on how CLASS fit into the overall LTC scheme, and potential LTC reform ideas. We need some creative thinking on LTC as it should by now be abundantly clear that it is much easier to identify what are you against in the area of LTC than it is to come up with a solution.

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