How Does LTCi Affect Your Family and the Economy?
The study, “Family Spillovers and Long-Term Care Insurance,” published in the Journal of Health Economics by Dr. Norma Coe, Dr. Gopi Shah Goda, and Dr. Courtney Van Houtven, examined what actually happens inside families when a parent owns private LTC insurance.
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56% of people who reach 65 will develop a disability severe enough to need long-term care |
3–4% of adults 50+ currently have private long-term care insurance coverage |
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$58.1B spent out-of-pocket by Americans on home health care and nursing facilities in 2019 alone |
No Change in actual caregiving hours provided — the insurance shifted expectations, not the caregiving itself |
The Insurance Didn't Reduce Caregiving. It Reduced Assumptions.
The researchers expected that parents with LTC insurance might receive less hands-on family care, since paid professional care becomes more affordable. That's not quite what they found. The actual amount of family caregiving didn't significantly change. What changed was expectation: parents who purchased LTCi became significantly less likely to expect their adult children to provide care in the future.
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“Findings indicate that having insurance did not reduce the amount of family care received during the study period, but it did change expectations about family care from their adult children.” |
The Career and Housing Effects No One Talks About
Adult children of insured parents were also less likely to live with their parents, and more likely to be working — full or part time — than adult children of uninsured parents. In other words, the insurance created flexibility for the next generation long before anyone in the family had actually filed a claim.
The researchers caution that these findings are most robust for tax-paying families in states with favorable LTCi tax treatment, so more research is needed to confirm how broadly the pattern holds. But the direction of the effect is clear, and it's a conversation advisors are rarely having.
How to Use This With Clients
• Reframe LTCi as a gift to the whole family, not just personal protection — it changes the calculus for clients weighing premium cost against family benefit.
• Bring adult children into the planning conversation when appropriate; the policy affects their career and housing decisions too.
• Correct the still-common assumption that Medicare covers long-term care — it's the first misunderstanding that needs addressing before any of this lands.
• Use the 3–4% private-coverage figure to explain why most families are exposed by default, not by choice.
As a CLTC®-certified professional, you're trained to have this fuller conversation — one that accounts for the whole family, not just the policyholder.