Private Long-Term Care Insurance and the Asset Protection Motive

Abstract

This research examined the role of assets in the decision to purchase insurance for long-term care using survey data from the Asset and Health Dynamics Among the Oldest Old (AHEAD) study. Previous research suggests that assets matter, but the size and direction of the effect varies. An important issue regarding the role of assets has not been explored adequately--whether the effect of assets differs between less wealthy and very wealthy individuals. A methodology to control for this type of variation is employed in this analysis. Results suggest that increases in assets have the greatest influence on the probability that less wealthy individuals own long-term care insurance, and have a negligible impact on the wealthy. This has important implications for policies designed to increase long-term care insurance ownership.

Factors Impacting Group Long-Term Care Insurance Enrollment Decisions

“…The results are consistent with Atchley and Dorman (1994) who found that risk aversion influenced the decision to purchase LTCI. The results are also supportive of findings in which individuals who perceive they are at higher risk for needing longterm care are more likely to purchase LTCI (HIAA, 1995(HIAA, , 2000(HIAA, , 2001Mellor, 2000;Stucki, 2001a). This result is consistent with decision-making theory, that individuals, who perceive there is a problem (in this case financing long-term care), are most likely to take action.…”

“…In addition to financial resources, the family structure or availability of caregivers as a source of informal long-term care is expected to influence the purchase of LTCI. However, Mellor (2000) found no significant effects of the availability of informal caregivers when examining insurance ownership and intentions to purchase.…”

“…The vast majority of group LTCI enrollees have been positioned in the middle to higher income ranges (over $24,000) (HIAA, 2001;Stucki, 2001b;Stum et al, 2001). If the buyer's assets were in mid-range ($100,000 to $200,000) they were found to be a factor in the individual LTCI enrollment decision (McCall et al, 1998;Mellor, 2000;Sloan & Norton, 1997). In addition to financial resources, the family structure or availability of caregivers as a source of informal long-term care is expected to influence the purchase of LTCI.…”

Couples Managing the Risk of Financing Long-Term Care

“…Most of these studies have focused on understanding behaviors in regards to LTCI as one financing alternative (AARP 2009;AHIP 2007;Curry et al 2009;Cramer and Jensen 2006;Mellor 2000;MetLife Mature Market Institute 2009;Schaber and Stum 2007;Swamy 2004). Some studies have explored intentions as well as behaviors and found that the majority of individuals who did not purchase LTCI intended to buy LTCI in the future (AHIP 2007;Swamy 2004).…”

Public-Private Partnerships in Healthcare Financing: Lessons From the New York State Partnership for Long-term Care

“…These values were used in conjunction with the total household income values from the March CPS and a variety of ability to pay thresholds estimating the percentage of household income that can be spent on LTC!. This analysis includes the 5 percent Mellor (2000) and the 10 percent maximum that Cohen et al (1993) encourage as well as a 2.5 percent minimum value. Table 1 shows the percentage of the New York state population with the ability to afford at least one partnership policy per household under each assumed percentage of income a purchaser would be able to pay.…”