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How Can Americans Afford Long-Term Care? BPC Releases New Recommendations

Headshot of Joann Donnellan
Joann Donnellan

Washington, D.C. – Paying for long-term care is a major financial challenge and heavy burden for many individuals and families living in the United States, often depleting their retirement savings. Each year, nearly $725 billion dollars is spent on long-term care. However, three out of four Americans over 40 are not confident they will have the financial resources to pay for needed care as they age. Today, the Bipartisan Policy Center releases its second set of recommendations for improving the financing and delivery of long-term care.

The proposals outlined in BPC’s new report, Financing Long-Term Services and Supports: Seeking Bipartisan Solutions in Politically Challenging Times, call for improving the availability of affordable long-term care insurance (LTCI) and financing of long-term services and supports (LTSS).

Recommendations include:

1. Private Long-Term Care Insurance: Permit penalty-free (but still taxable as income) early withdrawals from retirement savings accounts such as a 401(k) to purchase private long-term care insurance. This would help bear the costs for long-term services and supports.

2. Medicare Respite Benefit: Allow Medicare Advantage (MA) plans and other Medicare provider organizations the flexibility to offer respite care to high-need, high-cost Medicare beneficiaries. This would apply to patients who have three or more chronic conditions and functional or cognitive impairment and are part of a person-and family-centered care plan.

3. Beneficiary-Financed Medicare Supplemental Benefit: BPC’s new analysis suggests that Medigap and MA plans could offer an affordable LTSS benefit for older adults not eligible for Medicaid. Such a policy could result in premiums of $35 to $40 per member per month.

These recommendations build on BPC’s February 2016 report, Initial Recommendations to Improve the Financing of Long-Term Care. Taken collectively, BPC believes these policies provide short-term solutions to the challenges faced by patients, their families and other caregivers, private insurers, states, and policymakers.

“BPC’s analysis shows that if we allow people beginning at age 45 to take penalty-free withdrawals from their retirement plans to purchase retirement long-term care insurance, we would create 8.5 million new policyholders and increase federal revenue by $51 billion over 10 years,” said former Senate Majority Leader Bill Frist, who co-chairs BPC’s health project. “That’s a win-win for both families and the federal government.”

 “Research indicates that more than 50 percent of adults reaching age 65 will need high levels of costly assistance with daily activities such as eating, dressing, and bathing,” said former Senate Majority Leader Tom Daschle, who co-chairs BPC’s health project. “This issue is becoming a national crisis and families must have better options to help cover these potentially devastating out-of-pocket costs.”

This issue is becoming a national crisis and families must have better options to help cover these potentially devastating out-of-pocket costs.

“For the past 25 years, policymakers have failed to reach consensus on a sustainable means of financing and delivering long-term services and supports,” said BPC Health Policy Director Katherine Hayes. “We hope our recommendations will offer a path forward, and help to start the conversation on a comprehensive strategy that will help families and individuals.”

This initiative is supported by a grant from the SCAN foundation-advancing a coordinated and easily navigated system of high-quality services for older adults that preserve dignity and independence. For more information, visit

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