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Financing Long-Term Services and Supports: Seeking Bipartisan Solutions in Politically Challenging Times

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For more than a quarter-century, policymakers have sought solutions to improve the financing and delivery of long-term services and supports (LTSS). Recent analyses suggest that roughly 52 percent of individuals turning age 65 will require LTSS at some point in their life.

In 2016, driven by recommendations from private sector policy experts,a a general consensus formed around a multi-track approach that included:

Since the release the February 2016 report, Initial Recommendations to Improve the Financing of Long-Term Care, which outlines these recommendations in detail, BPC has also issued two reports that have implications for LTSS financing and coordination of care for high-cost, high-need Medicare beneficiaries. These two reports, Delivery System Reform: Improving Care for Individuals Dually Eligible for Medicare and Medicaid and Improving Care for High-Need, High-Cost Medicare Patients, recommend providing additional flexibility to better integrate health and social services and supports for the highest-cost Medicare beneficiaries.

Following on these reports and recommendations, BPC analyzed additional options and issues related to the financing of LTSS. After evaluating a variety of options discussed in more detail in this report, BPC offers the following recommendations to improve the availability of affordable LTCI and financing of LTSS.

New Analysis and Recommendations

  • Private Long-Term Care Insurance Improvements
    Permit penalty-free (but not tax-free) withdrawal from retirement savings accounts for employer-offered private LTCI. Permitting individuals to use retirement savings to purchase “retirement LTCI” would help defray LTSS costs, which for many Americans depletes retirement savings.

  • Medicare Respite Benefit
    Build on previous recommendations to permit Medicare Advantage (MA) plans, and other Medicare provider organizations operating under a “benchmark,” the flexibility to offer a respite care benefit to high-need, high-cost Medicare beneficiaries. Respite care, along with other services, could be offered under this flexibility, so long as the services are part of a person- and family-centered care plan for a subset of individuals that meet the eligibility criteria, which includes patients with three or more chronic conditions and functional or cognitive impairment.

  • Beneficiary-Financed Medicare Supplemental Benefit
    Permit Medigap and MA plans to market a limited LTSS benefit as an optional supplemental benefit, or as a separate insurance policy, financed exclusively through additional premiums paid by Medicare beneficiaries who choose to enroll. For the purposes of estimating the added cost of the benefit to Medigap or MA premiums, BPC assumed a $75 maximum daily benefit, with a 180-day elimination period that would need to be satisfied prior to the commencement of the benefit. Consistent with existing Medigap policies, beneficiaries would have a one-time option to purchase this coverage when they enroll in Medicare. BPC’s analysis suggests that such a policy could result in premiums of $35 to $40 per member per month (PMPM).

For those who lack sufficient personal resources to pay out-of-pocket, Medicaid is the primary payer of LTSS costs. Medicaid is expected to cover about 34 percent of average lifetime LTSS costs of people turning 65 today.

Previous Recommendations

Conclusion
We believe that collectively, these policies have the potential to advance the broader understanding of the challenges and policy opportunities, and to provide solutions to challenges faced by patients, their families and other caregivers, private insurers, states, and policymakers.

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