UK on Collision Course with Long-term Care (LTC) Costs

A newly released report by the Alzheimer’s Society (The Dementia Tax Report 2011. Alzheimer’s Society, Devon House, 58 St Katharine’s Way, London E1W 1LB) minces no words describing the collision course between the UK economy and its growing long-term care needs.

Although the report studied the British, the many similarities between our two countries and cultures make the study relevant here.

The study found that only 3% of those with dementia own long-term care insurance (LTCi). The LTCi industry has existed in Britain for quite some time, but it is not as fully evolved as the LTCi industry in the US, where about 10% of us own LTCi, as my blog on the new Urban Institute study confirms.

The Alzheimer’s Society study (p. 3) states that “Despite the hard work of many care staff and care providers there are many thousands of people who cannot access the quality care and support that they need to have a good quality of life. Latest reports from the Equality and Human Rights Commission, Age UK and others show that the system is not simply in need of repair but is fundamentally broken.

There are currently 750,000 people living with dementia in the UK and this number will grow to over 1 million by 2021. Two thirds of people living in care homes and one quarter of people in hospitals are people with dementia.”

Yow!

Interestingly, but not really surprising, the survey asked British respondents why they did not own LTCi. They gave the same excuses we Americans do: they didn’t know about it, they didn’t expect to need care, and LTCi is too expensive. In my March 28, 2011 blog I reported similar results of Prudential’s recent study.

Of course, LTCi is not too expensive. “LTCi is too expensive” is simply an excuse people give to avoid having a conversation about responsible long-term care planning. Here’s the simple math. Say your premiums are $2,000/year. Say you need to collect from your LTCi in 20 years (pick any number and the math. is the same). From your $40,000 investment, you will collect over $60,000 (in today’s dollars) from your LTCi policy when you need care for ONLY ONE YEAR. According the US Department of Health and Human Services, the odds of needing some type of long-term care at age 65 are at least 70%.

If you don’t yet own LTCi, please take heed of these warnings and act responsibly – NOW!