Senior signing contract

Average individual long-term care insurance claim amounts for care in assisted living facilities are much higher than claim amounts for home care or care in nursing facilities, according to the 2019 Milliman Long Term Care Insurance Survey.

Individual claims for all assisted living participants averaged $93,635, compared with $43,467 for home care and $63,751 for nursing facilities, according to the latest data, reported in Broker World.

Individual claims for care in assisted living facilities are “consistently high,” the authors said. They offered four possible reasons:

  1. Assisted living facility claims last longer than claims related to other settings.
  2. Nursing home costs are more likely to exceed a policy’s daily / monthly maximum, so the maximum daily benefit negates part of the additional daily cost of nursing homes.
  3. People who maximize the use of their maximum monthly benefits can spend as much on an assisted living facility as on a nursing home.
  4. Assisted living facilities often charge more for memory care units or for increased assistance with activities of daily living, which may approach nursing home care, and the upscale nature of some assisted living facilities also may play a role.

“Some people may have expected ALF claims to be less expensive than nursing home claims because ALFs cost less per month,” the authors wrote. “But that has not been the case.”

Assisted living facility-related claims accounted for 35% of the dollar amount of paid long-term care insurance policy claims in 2018 — a higher percentage than claims related to home care or nursing facilities — and represented 29.3% of the number of claims — a percentage lower than that associated with home care or nursing facilities. Both claim amount and claim number percentages generally have trended upward for assisted living but downward for nursing homes since 2013, according to the survey.

“Individual claims in general have shifted away from nursing homes,” the authors said. “We expect on-going shift away from nursing homes due to consumer preferences and more claims coming from comprehensive policies.”

Eleven carriers participated “broadly” in the Milliman survey, and four others provided sales information, according to the authors.

Overall, more than $3.3 billion was paid out for more than 109,000 claims in 2018, the researchers found. The 15 carriers reported a 13.1% drop in the number of policies sold from 2017 to 2018 (64,800 versus 56,288).

Read all of the survey results here.